Friday, 26 March 2021

Voice of Entrepreneurs: Government Has Not Helped Travel Agencies

ZAGREB, 26 March, 2021 - The Voice of Entrepreneurs association warned on Friday of the difficult position of travel agencies in a year of the pandemic, during which they had lost over 90% of revenue, adding that the government had done nothing to help them.

"The media say that travel agencies have received billions of kuna in aid from the state, which is simply not true. Also, (Education) Minister Fuchs and (Tourism) Minister Brnjac are asking travel agencies to find the money to return vouchers given to passengers, and a new law is being mentioned, under which the agency is obliged to give its clients a refund within 15 days. However, it isn't said that travel agencies have on average lost over 90% of revenue over the past year," the association said in a press release.

It added that the owners of travel agencies could not get loans to refund their clients, that they were forced to sell their own real estate to cover the expenses and that they had not received a single penny of help from the state or any other institution.

The only aid they received is HRK 4,000 monthly grant for workers, but for every employee, the employer has to cover the additional cost of transport and other fixed costs, for which no solution has been found to date, the association said.

It said that fixed costs had not been covered either, and since they were closed, agencies could not cover all the costs.

Travel agencies "were not closed by the decision of the national civil protection team, but their operation is completely restricted by government measures," the association stressed.

For more about politics in Croatia, follow TCN's dedicated page.

Friday, 26 March 2021

A1 Croatia: "No Deal Reached With United Media Group on N1 Channel"

ZAGREB, 26 March, 2021 - The A1 Hrvatska telecommunications company said on Friday that no agreement had been reached with the United Media Group on the distribution of the N1 TV channel, and that as of 29 March the channel would no longer be available on their TV platform.

The company said it was ready to pay a much higher distribution price than justified for a longer period, but the United Media Group had set an additional condition and asked for a six-month contract only, despite the fact that the contract had usually been a three-year one.

"A1 Hrvatska cannot accept a six-month agreement because that means avoiding a real solution for us and our customers. Such a condition is manipulation ... which United Media Group uses for its negotiations with other operators which it is currently conducting, and it is using this situation to put pressure on state institutions in order to change the legal framework," the telecom said.

It said it is "still open for talks and cooperation with all providers of attractive programme content who are willing to cooperate and whose broadcasting is in the interest of users".

"Even after United Media Group has launched a media campaign trying to manipulate and exert pressure on us by calling commercial business negotiations media censorship, we were willing to continue negotiating until the last moment in good faith and in the best interest of our customers, seeking only a reasonable and viable offer for the distribution of the N1 channel," A1 said.

It added that despite the statements by the programme director that they were prepared to offer to distribute the N1 channel free of charge, that option had never officially been offered during the negotiations.

It has been recently announced that A1 cable provider will drop N1 television and Sport Klub channels from its programming package. The decision to replace some of the channels in their offer, including N1, was made solely due to unfavourable business conditions, the operator said.

In mid-March the United Media replied that "A1 didn’t have a single reason to make the decision they made and drop N1 and Sport Klub."

For more about business in Croatia, follow TCN's dedicated page.

Thursday, 25 March 2021

Zagreb Stock Exchange Indices Down For Second Consecutive Day

ZAGREB, 25 March, 2021 - The main Zagreb Stock Exchange (ZSE) indices fell on Thursday for the second day in a row, with the Crobex dropping by 0.38% to 1,846.46 points and the Crobex10 by 0.57% to 1,155.33 points.

Turnover at the close of the trading session was HRK 5.88 million, about 2 million higher than on Wednesday. An additional HRK 2.5 million was generated by a block transaction with shares of the Atlantic retail group, at HRK 1,470 per share.

The only two stocks to pass the turnover mark of one million kuna were the HT telecommunications company and the Podravka food company, each turning over HRK 1.1 million. The price of the HT share decreased by 0.53% to HRK 188, while the Podravka share shrank in price by 1.87% to HRK 524.

The winner of the day was the Sunce Hoteli hotel company, which saw the price of its share jump by 6.02% to HRK 176 following the announcement that it was in the process of being taken over by the Eagle Hills Zagreb Real Estate company, owned by a businessman from the United Arab Emirates.

A total of 37 stocks traded today, with 13 of them recording share price increases and as many registering share price decreases, while 11 remained stable in price.

(€1 = HRK 7.570626)

For more about business in Croatia, follow TCN's dedicated page.

Wednesday, 24 March 2021

Zagreb Stock Exchange Indices Slip Into Red

ZAGREB, 24 March, 2021 - The main Zagreb Stock Exchange (ZSE) indices dropped by about 0.5% on Wednesday, with the Crobex decreasing by 0.48% to 1,853.53 points and the Crobex10 slipping by 0.54% to 1,161.91 points.

Regular turnover amounted to a mere HRK 3.8 million, about 2 million less than on Tuesday, and not one stock crossed the turnover mark of one million kuna.

The highest turnover, of HRK 770,100, was generated by the Atlantic food group. The price of its shares dropped by 0.68% to close at HRK 1,470 per share.

(€1 = HRK 7.570356)

For more about business in Croatia, follow TCN's dedicated page.

Tuesday, 23 March 2021

Standard & Poor's: Tourism Vulnerable Point and Factor for Croatia's Economic Recovery

ZAGREB, 23 March, 2021 - Croatia's economic recovery from the pandemic recession hinges on the tourism sector's recovery, the Standard & Poor's agency said, assessing that recovery and protective mechanisms will offset the risks caused by the pandemic.

Croatia's economic recovery from the pandemic-induced recession is within reach as long as tourism picks up, S%P's said in its outlook released on Tuesday.

It recalled that Croatia's credit rating is 'BBB-/A-3', with a stable outlook.

Impact of COVID-19 pandemic blow to tourism

Croatia's economy is expected to expand by 5.1% this year, S&P's said in its latest outlook contracting Croatia's estimated GDP growth by half a percentage point.

In 2020, the country's GDP fell by 8.4% according to S&P's forecast, however this is 0.4% percentage points less than it had forecast in its autumn outlook in September.

In 2022 the economy is expected to grow by 3.5%, and by 2.6% in 2023 and 2024.

S&P considers that mass vaccination against COVID-19 is a precondition for economic growth which will relieve travel restrictions hence boosting tourism.

Tourism in fact has been affected the most by the pandemic, causing GDP to contract by more than 8% in 2020.

"This highlighted vulnerabilities due to Croatia being one of the most-tourism dependent sovereigns in Europe," S&P's said, adding that "despite prospects of a dynamic summer season, we assume that the tourism sector won't fully recover to the record pre-pandemic numbers over the coming two years." 

Strong protection mechanism

Even though this has left its mark on the balance of payments, Croatia still has strong protection mechanisms against potential external pressure with its high foreign reserves and its swap line with the European Central Bank.

Also, Croatia entered the pandemic period with an improved budget situation and the government could reach out to strong fiscal support measures to relieve the consequences of the pandemic on the labour market.

The budget deficit to GDP this year will amount to 2.9%, which is 0.1 percentage points better than the autumn outlook.

In 2020 the budget deficit amounted to 7.8% of GDP or 1.4 percentage points more than estimated last September.

Next year that deficit could be reduced to 2.0% of GDP and to 1.5% in 2023.

S&P's underlined Croatia's plan for "quick euro adoption is Croatia's key policy goal, after last year's entry into the Exchange Rate Mechanism (ERM II)."

Favourable financing conditions

Due to the pandemic, public debt jumped to a record 88% of GDP in 2020, "however, the government's debt profile benefitted from historically low funding costs and extended debt maturities."

This year it is expected to fall to 84.3% of GDP and below 80% again in 2024.

"We could lower the ratings on Croatia if, contrary to our expectations, external financing pressure was to build or if public finances failed to recover over the coming two to three years, pushing public debt up," S&P said.

The report recalls that Croatia is also entitled to ample EU funds under various envelopes including Next Generation EU and the Recovery and Resilience Facility in the coming years, which will probably contribute to economic recovery.

Additional support should be available for reconstruction efforts following the earthquakes that hit Zagreb in March 2020 and Sisak-Moslavina County in December 2020.

"Net inflows from the EU budget could also support fiscal buffers without unduly constraining investments, which underpins the importance of efficient preparation and the absorption of available funds," S&P's report notes.

For more about business in Croatia, follow TCN's dedicated page.

Monday, 22 March 2021

Life After Pandemic and Tourism Recovery Discussed at Communication Management Forum

March 21, 2021 - The fourth online edition of the Communication Management Forum held from 19 to 20 March discussed what awaits us after the pandemic. There was also talk of tourism recovery, the industry hardest hit by the coronavirus pandemic.

The Communication Management Forum (CMF) was held online and was attended by scientists and experts from several countries, including Spain, Turkey, the United Kingdom, Russia, and India. The scientific event proved to be an excellent opportunity for a multidisciplinary discussion necessary about a crisis like pandemics. The conference opened numerous topics in sociology, communication, economics, and tourism, and gathered scientists and experts offered their views on what awaits us once the pandemic is over.

A key issue discussed at the CMF was what awaits us after the pandemic. The participants at the virtual roundtable "Post-pandemic world: a bad picture or good opportunity?" came to a common conclusion that adaptation was inevitable and that the change of business and social paradigm is something else we need to work on. Therefore, the pandemic and the post-pandemic world are equally seen as a good opportunity for all segments of private and business life.

"The situation caused by the pandemic was a threat to humanity. We are stuck in our own homes, and everything very quickly shifted from the real world to online. The way we live now is our present and near future, we have to accept that, but we don’t have to come to terms with it. We should try to lead a life as normal as possible. Still, the big question remains, how we will recover as a society in the anthropological sense?" said Slovenian anthropologist Dan Podjed.

The pandemic flooded the media with negative headlines, followed by a bit of encouraging news when the first vaccine appeared. Still, with a new wave of pandemics increasing, we returned to a negative perspective. Nevertheless, some sectors and segments of life have experienced tectonic changes, which will significantly affect the recovery and development perspective.

"Before the pandemic, tourism was mass, and it was focused on the number of as many guest arrivals possible in destinations around the world. This has completely changed the concept of tourism functioning. Stakeholders in tourism will have to accept the new reality and focus on the quality offered to attract tourists to their destinations, who will return in the future," said Jeremy Sampson, CEO of Travel, a leading NGO in the travel and tourism sector.

Sociologist Branko Ančić from the Institute for Social Research believes that crises like this increase the problems we have had as a society before.

"The pandemic has opened up many problems. On the one hand, we see an increase in hate speech in relation to different social groups, and on the other, we are witnessing immense togetherness. To deal with everything that this crisis has brought us, we need more responsible behavior of everyone in society," said Ančić, one of the co-chairs of the CMF Committee.

The Communication Management Forum 2021 was organized by Edward Bernays University College, the Institute of Tourism, and the Institute for Social Research in Zagreb. The two-day conference offered answers to questions about developing business and private life after the end of the pandemic. Scientists and experts agreed that the crisis had created many backs, but that adjustment has been key. Many agreed that the pandemic indicated that we were facing crises and challenges relevant in the next few years.

In four editions, the CMF has gathered more than 750 scientists and experts. The conference has also contributed to the conclusions from the communication and tourism aspect for many years. As Damir Jugo, Dean of Edward Bernays University College points out, this year’s edition has been the most scientifically relevant so far.

To read more news about lifestyle in Croatia, follow TCN's dedicated page.

Friday, 19 March 2021

Croatian National Bank: "45% of Croatia's Citizens Support Euro Adoption"

ZAGREB, 19 March, 2021 - The percentage of Croatian citizens who support the adoption of the euro in February this year has reached 45%, up by four percentage points from 41% in a previous survey, conducted in March 2020, the Croatian National Bank (HNB) said on Friday.

The fourth public opinion poll on the adoption of the euro was carried out for the HNB by the Ipsos agency from 23 February 2021 to 1 March 2021.

Nineteen percent of citizens are against the adoption of the euro, while 26% are either against or in favour depending on other factors, and 10% of the respondents do not know, the HNB said.

Also, they said, an increasing number of citizens think that the effect of the euro will be positive. Some of the advantages they see include easier payment and business, as well as the fact that the euro is the common currency in the euro area, which would make Croatia equal to other members of the monetary union.

On the other hand, they see a decline in the standard of living and purchasing power as the main risk, and over a third of citizens think that the adoption of the euro will further increase prices.

To date, the poll has been carried out four times: in August 2018, in February 2019, in March 2020 and in February 2021. The survey is conducted on a nationally representative sample of 1,000 respondents, aged 18 to 79, using computer-assisted telephone interviewing (CATI), and it covers four thematic units: the use of the euro in the Republic of Croatia by foreign citizens, how informed citizens are on the adoption of the euro, citizens' attitudes to the adoption of the euro and their expectations.

The aim of the survey is to determine whether Croatian citizens support the strategic commitment of the government and the HNB to adopting the euro as the official currency in Croatia and whether they are aware of all the benefits that the adoption of the euro will bring to them and the national economy.

For more about business in Croatia, follow TCN's dedicated page.

Friday, 19 March 2021

Advantages of Euro Currency Significant but Economy Needs to be More Flexible

ZAGREB, 19 March, 2021 - Croatia will enter the euro area on 1 January 2023 at the earliest, and introducing the euro has a number of advantages but for those advantages to be greater the economy needs to be more flexible, including with regard to the labour market, a conference heard on Friday.

The conference, focusing on the introduction of the euro as the official currency in Croatia, was organised by the students' association Financial Club.

Croatian National Bank (HNB) Governor Boris Vujčić said in his opening remarks that Croatia cannot enter the euro zone before 1 January 2023.

"Whether Croatia will enter the euro area on 1 January 2023 or a year or two later, depends on when it will meet the nominal convergence criteria," said Vujčić, recalling that in July 2020, Croatia entered the European Exchange Rate Mechanism II (ERM II), a sort of waiting room for the euro.

He explained that the ERM II envisaged a minimum two years of participation in it so that a candidate aspiring to join the euro area can meet the nominal convergence criteria (Maastricht criteria). On the other hand, if it does not satisfy the criteria, which refer to the stability of the exchange rate, prices and interest rates, the budget deficit and the level of foreign debt, a country can remain in the ERM II indefinitely, Vujčić said.

He recalled a survey indicating that citizens fear that with the introduction of the euro the standard of living will deteriorate and prices will increase. However, surveys in countries that have already introduced the euro indicate that prices increased by 0.23 percentage points on average in the year when the euro was introduced, mostly for everyday goods such as coffee. Prices of such products are relatively lower so their increase could have been relatively high due to rounding off.

"That left the impression in public that prices increased more than they did," explained Vujčić, underscoring that the standard of living did not fall in any country that introduced the euro but rather it improved.

Ćorić: Biggest advantage to companies exporting to euro area

Minister of Economy and Sustainable Development Tomislav Ćorić said that it was clear that citizens would not start living better on the first day of introducing the euro, however, what points to better prospects was the fact that the macro environment in the euro area was free of risks that non-member countries were faced with.

The risk premium in all countries that entered the euro area has dropped, said Ćorić, noting that that was something that in normal circumstances should  bring benefits to Croatia, such as reducing yields on long-term security instruments and lower interest rates on commercial and consumer loans.

Considering, however, that we live in "fairly radical economic times," and a period of very low interest rates, the effects which countries that entered the euro area some ten years ago had would be somewhat lower, however, they would still be significant, he said.

The advantages are potentially biggest for export-oriented companies considering that the exchange rate risk will be eliminated, he said.

Ćorić said that the project for euro introduction was not an end in itself but was primarily a very good tool for Croatia's long-term economic growth and development.

Mačkić: Flexibility of labour market, final goods and services market

President Zoran Milanovic's economic adviser, Velibor Mačkić, conveyed the president's message saying that it was necessary to discuss the benefits and potential harm of Croatia joining the euro area.

Mačkić believes that Croatia has not developed its own institutions sufficiently and that that poses a problem. "The country needs a different economy, a much more flexible economy, to be able to benefit more significantly from the monetary union," said Mačkić.

He added that the labour market and the market of final products and services need to be more flexible.

Mačkić underlined the importance of an efficient fiscal policy and of the reform of the tax system which Mačkić believes needs to change from "a consumption-based to income-based tax system."

For more about business in Croatia, follow TCN's dedicated page.

Wednesday, 17 March 2021

Zagreb Stock Exchange: Indices Fall For Second Day Amid Weak Trading

ZAGREB, 17 March, 2021 - The main Zagreb Stock Exchange indices slipped on Wednesday by about 0.7%, falling for the second straight day amid a poor trading day of just over HRK 3 million.

The Crobex fell by 0.73% to 1,863 points and the Crobex10 fell by 0.68% to 1,172 points. Both indices dropped for the second day running.

All sector indices dropped too with the construction index falling the most by 5.93%. 

Regular turnover was a mere HRK 3.3 million or 2.2 million less than a day earlier.

Not one stock crossed the million kuna mark.

The highest turnover of HRK 676,000 was generated by the HT telecommunications company with the price of its shares plunging by 1.79% to close at HRK 192.50.

(€1 = HRK 7.6)

For more about business in Croatia, follow TCN's dedicated page.

Wednesday, 17 March 2021

British American Tobacco Stays in Croatia - Say Rovinj, Agriculture Union

ZAGREB, 17 March, 2021 - Representatives of the PPDIV agriculture union on Wednesday met with Rovinj Mayor Marko Paliaga, saying afterwards that the story of the future of the Rovinj Tobacco Factory (TDR) "ended well and British American Tobacco (BAT) stays in Croatia."

Paliaga thanked the unionists for fighting for TDR workers, the City of Rovinj said in a press release.

The Kanfanar-based TDR is owned by British American Tobacco.

The unionists thanked the mayor for the cooperation and support in negotiations with BAT on keeping the plant in Kanfanar, following announcements last year that it might be shut down.

The workers need not fear for their future any longer because TDR is staying in Kanfanar, the press release said.

PPDIV president Denis Paradiš said TDR's staying in Croatia was important for Rovinj, Istria County as well as for the Slavonia region and tobacco growers. "It's important for all of Croatia."

BAT took over TDR from Adris Group in September 2015 for €505 million. Under the contract, BAT was to keep production in Kanfanar for at least five years.

Last year media reported that BAT was considering to leave Croatia due to deteriorated business conditions. In December, Prime Minister Andrej Plenković said the government's negotiations with BAT were going well and that he would do everything for BAT to keep production in Istria.

For more about business in Croatia, follow TCN's dedicated page.

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