World Bank Raises Croatia's 2019 and 2020 Growth Forecast

By 9 January 2020

ZAGREB, January 9, 2020 - According to the latest World Bank estimates, Croatia's growth in 2019 and 2020 is forecast to pick up to 2.9% and 2.6% respectively, which means that the difference from previous estimates is respective 0.4 and 0.1 percentage points.

The World Bank's Global Economic Prospects, issued on Wednesday. reads that in 2021, Croatia's economy is likely to slow to 2.4%, and this forecast is the same as in the previous report issued in June 2019. Croatia's economy is set to grow at the rate of 2.4% also in 2022.

The latest report reads that the growth in emerging economies in Europe and Central Asia, the region where Croatia is also added in the report, "is expected to firm over the forecast horizon, to 2.6 percent in 2020 and 2.9 percent in 2021-22, on the assumptions that key commodity prices and growth in the Euro Area stabilize, and that Turkey’s economy recovers from earlier financial pressures and Russia firms on the back of policy support."

Considerable variation across economies is expected to continue. "Economies in Central Europe are anticipated to slow as fiscal policy support wanes and demographic pressures persist, while those in Central Asia are projected to continue growing at a robust pace, and more rapidly than previously envisaged, on the back of structural reform progress."

Central Europe is forecast to sharply decelerate over the forecast horizon, to 3.4 percent GDP growth in 2020 and 3 percent by 2022.

Growth in the Central Europe is "highly dependent on the continued absorption of EU structural funds, with the current cycle expected to end in 2020."

"The regional outlook remains subject to significant downside risks, including slowing growth in major trading partners, geopolitical turbulence, heightened policy uncertainty, exposure to disorderly financial market developments, as well as weakening productivity growth over the long run."

Global growth set to pick up modestly to 2.5% in 2020 amid mounting debt and slowing productivity growth

Global economic growth is forecast to edge up to 2.5% in 2020 as investment and trade gradually recover from last year’s significant weakness but downward risks persist, the World Bank says in its January 2020 Global Economic Prospects.

"Growth among advanced economies as a group is anticipated to slip to 1.4% in 2020 in part due to continued softness in manufacturing.

"Growth in emerging market and developing economies is expected to accelerate this year to 4.1%. This rebound is not broad-based; instead, it assumes improved performance of a small group of large economies, some of which are emerging from a period of substantial weakness. About a third of emerging market and developing economies are projected to decelerate this year due to weaker-than-expected exports and investment.

"With growth in emerging and developing economies likely to remain slow, policymakers should seize the opportunity to undertake structural reforms that boost broad-based growth, which is essential to poverty reduction," World Bank Group Vice President for Equitable Growth, Finance and Institutions, Ceyla Pazarbasioglu, was quoted as saying.

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