Tuesday, 7 July 2020

Croatia Among Three Worst Hit Economies by Corona in EU


ZAGREB, July 7, 2020 - The coronavirus pandemic has impacted all European Union countries but not equally and the most affected countries are those that largely depend on tourism, notes the European Commission's summer 2020 economic forecast released on Tuesday.

Croatia is among the three most affected countries in the European Union. The commission forecasts that Italy's GDP will contract the most (-11.2%) followed by Spain (-10.9%) and Croatia (-10.8%).

Poland's economy is expected to decrease the least (-4.6%), and is followed by Denmark (-5.2%), Sweden (-5.3%), while Romania and Malta are with a fall of 6% respectively.

The greatest EU economy Germany can brace itself for a 6.3% decrease in GDP.

"The shock to the EU economy is symmetric in that the pandemic has hit all Member States. However, both the drop in output in 2020 and the strength of the rebound in 2021 are set to differ markedly. The differences in the scale of the impact of the pandemic and the strength of recoveries across Member States are now forecast to be still more pronounced than expected in the Spring Forecast," the commission said in a press release.

The average drop in the euro area economy in 2020 is estimated at 8.7% while it is expected to grow by 6.1% in 2021.

The EU economy is forecast to contract by 8.3% in 2020 and grow by 5.8% in 2021.

Based on current forecasts the contraction in 2020 is, therefore, projected to be significantly greater than the 7.7% projected for the euro area and 7.4% for the EU as a whole in the Spring Forecast released on May 6.

Growth too will be somewhat weaker than had been forecast in the spring.

"This forecast shows the devastating economic effects of that pandemic. The policy response across Europe has helped to cushion the blow for our citizens, yet this remains a story of increasing divergence, inequality and insecurity. This is why it is so important to reach a swift agreement on the recovery plan proposed by the Commission – to inject both new confidence and new financing into our economies at this critical time,” Commissioner for the Economy, Paolo Gentiloni was quoted as saying.

Executive Vice-President for an Economy that works for People, Valdis Dombrovskis however warned of the second wave of the pandemic.

"The economic impact of the lockdown is more severe than we initially expected. We continue to navigate in stormy waters and face many risks, including another major wave of infections. If anything, this forecast is a powerful illustration of why we need a deal on our ambitious recovery package, NextGenerationEU, to help the economy. Looking forward to this year and next, we can expect a rebound but we will need to be vigilant about the differing pace of the recovery. We need to continue protecting workers and companies and coordinate our policies closely at EU level to ensure we emerge stronger and united,” said Dombrovskis. 

The impact of the pandemic on economic activity was already considerable in the first quarter of 2020, even though most Member States only began introducing lockdown measures in mid-March.

With a far longer period of disruption and lockdown taking place in the second quarter of 2020, economic output is expected to have contracted significantly more than in the first quarter.

On the other hand, early data for May and June suggest that the worst may have passed. The recovery is expected to gain traction in the second half of the year, albeit remaining incomplete and uneven across the EU, the commission's press release said.

Tuesday, 12 May 2020

Opposition: Budget Revision Doesn't Give Answers for Situation after June

ZAGREB, May 12, 2020 - Opposition parties in parliament on Tuesday criticised the 2020 budget revision, saying that it does not give any answers for the period after June when job-keeping measures will expire, and warned of a possible sudden increase in unemployment.

"The revision is gauged for the period until June 15 and does not provide any answers as to what will happen after that. That is when the key measure to preserve jobs expires," said Branko Grčić (SDP), asking what would happen with the 500,000 jobs after June 15.

"Where is the decision to extend that measure for three months? Where is the money to finance that measure? There isn't any..." said Grčić.

He believes that 500,000 people will end up in the Employment Service while money to cover their unemployment allowances has not been included in the budget revision.

Grčić added that all countries in the neighbourhood had introduced measures to help the business sector but also measures for households and that only consumption and demand can maintain any economic activity in the short term.

Nikola Grmoja (MOST) said that it's obvious from the budget revision that the election is at the front door and that budget spending is not being reduced while a drastic drop in revenue is expected. He, too, warned of the possible sudden increase in unemployment once the government's measures expire.

He called out the government and ruling majority for protecting banks because they did not adopt a decision on a loan and interest payment moratorium.

Grozdana Perić of the ruling HDZ party refuted criticism that the government was protecting only certain sectors, noting that it considered all economic activities important.

She added that the budget revision was a consequence of the coronavirus crisis and that Croatia would emerge from the current crisis much sooner than had been the case earlier.

More budget news can be found in the Business section.

Tuesday, 12 May 2020

Number of Receipts up 25% on the Week, Value up 21%

ZAGREB, May 12, 2020 - The number of receipts issued in all activities covered by the fiscalisation system increased by 25% on the week and their value increased by 21%, whereas on the yearly level they recorded a double-digit fall, the latest figures from the Tax Administration show.

In the week from May 4 to 10, when the second round of lockdown restrictions were lifted, allowing hairdressers, beauty salons, barbers and pedicurists to reopen, among others, compared to the week from April 27 to May 3, the number of receipts in all activities increased by 25% to 27.7 million receipts issued and their value increased by 21% to HRK 2.8 billion.

The number of receipts issued in retail, vehicle and motorcycle repairs increased by 24% and their value increased by HRK 19.95 million, or 18.4%, to HRK 2.21 billion.

At the same time, receipts issued in hospitality and tourism increased by 33.7% or just over 720,000, and their amount went up 23% to HRK 44 million.

A comparison of the period from May 4 to 10 with the same period last year indicates that the number of receipts issued in all activities was down by 37% and their value by 20%.

Receipts issued in retail were down 23% and their value was 7% lower on the year.

In the accommodation and food preparation segments, the number of receipts issued decreased by 90% on the year, with a decrease in value of 89%.

Since the start of the coronavirus crisis in Croatia, in the period from February 24 to May 10, the number of fiscal receipts dropped by 38% and their value by 23% compared to the same period last year.

In that period, 293.2 million receipts were issued with a value of HRK 27.7 billion, while last year at the same time 469.6 million receipts were issued with a value of HRK 36.2 billion.

More economy news can be found in the Business section.

Thursday, 7 May 2020

Everyone Will Feel Budget Cuts, Expenditures Stay as Planned

ZAGREB, May 7, 2020 - A revised budget should be ready for the government's meeting on Thursday, Finance Minister Zdravko Marić said on Wednesday, adding that everyone would feel the cuts and that despite the difficult circumstances, budgetary expenditures would stay as planned.

Asked by the press ahead of an inner cabinet meeting how much the budget would be reduced, Marić said that despite additional expenses for the health system and outlays to keep jobs, budgetary expenditures would stay as originally planned.

He said savings would be made wherever possible so that the expenditure side of the budget that is financed from taxes and contributions stayed as originally planned.

Asked who the biggest "victim" of the revised budget was, Marić said "everyone, depending on their budgets."

"The most important thing is that everyone contributes. In today's circumstances, you can't expect the Health Ministry's budget to be reduced significantly when you have constant demands for outlays for equipment or masks, or the Labour and Pension Ministry's budget for pensions and support to the economy," said Marić.

The key message of the revised budget is that we are managing to keep expenditures as planned, he added.

This year's budgetary revenues are planned in the amount of HRK 145 billion and expenditures in the amount of HRK 147 billion.

The decrease in revenues is evident due to the bailout measures for the economy and, even more so, the decline in economic activity, Marić said, adding that the revenues side of the budget would certainly "suffer."

Asked if Croatia would borrow on the foreign market soon given the possibility of a caretaker government, he said the international market was "in our focus" but that it is necessary to prepare well for that and to "wait for the right moment."

Commenting on the European Commission's latest economic forecast, Marić said the steep decline in all of the EU would not be fully compensated for in 2021 and that it is necessary to work on making the decline as small and recovery as quick as possible.

The fiscal position and estimate of the public debt-to-GDP ratio are similar to the government's projections, which means the government's projections are credible, he added.

Asked if there was money to keep jobs after June, when a three-month period of government aid for that purpose ends, Marić said the money for May had been ensured through a bond issue and that aid for June and other months would be worked on.

As for tax payment deferrals, he said they were possible for a period of six months and that this measure might be reviewed, depending on the circumstances.

More budget news can be found in the Business section.

Wednesday, 6 May 2020

HGK: Five Years for Trade Sector to Recover

ZAGREB, May 6, 2020 - It will take five years for the Croatian trade sector to recover from the impact of the crisis caused by the coronavirus epidemic, the Croatian Chamber of Commerce (HGK) said on Wednesday.

"The public must be aware that the trade sector has borne a heavy burden on its shoulders, without increasing margins or prices, which helped all the citizens in this crisis," the HGK vice-president for trade, Josip Zaher, said at a meeting of the HGK's trade association.

Zaher said that retail trade had dropped by 25% in April.

The association's president Ivica Katavić said: "We've been through two difficult months. There have been problems in business, including inspections, shorter business hours and limited entry into the shops. But we managed to keep our heads above water."

Katavić said that the restrictions that had done the greatest damage were shortened shop opening hours and e-passes allowing travel. "With the lifting of these restrictions, the situation has improved considerably. The situation was most difficult at the start of April, but considering the circumstances we must be satisfied. We are also satisfied with our communication with the HGK, who were at our service," he added.

The CEO of the Konzum retail chain, Slavko Ledić, said that the sharpest declines had been recorded in large stores. "The key move was to extend opening hours, it was even more important than Sunday trading. The most important thing for us was to have opening hours extended and that we could pay wages," Ledić said.

The CEO of textile distributor Tekstilpromet, Hrvoje Šimić, drew attention to problems faced by the non-food trade sector, which has 90,000 employees.

"Over a period of 50 days our turnover was zero, while at the same time banks showed no sympathy. Some of the shopping centres also did not prove to be good business partners to Croatian traders because, for example, they sent their invoices for May already in mid-April," Šimić said.

More economic news can be found in the Business section.

Wednesday, 6 May 2020

Consumer Sentiment, Expectations Indices See Significant Drop

ZAGREB, May 6, 2020 - A consumer confidence survey conducted in April by the Croatian National Bank (HNB) shows that consumer confidence indices have seen their strongest monthly and annual decreases since the bank started monitoring them.

The consumer confidence index in April was -32.2 points, which is its lowest level since May 2014, while the consumer expectations index was -42.1 points, its lowest level since August 2009. The consumer sentiment index was -23.5 points, the same as in June 2017.

The composite consumer confidence index in April dropped by 22.3 points from March and in relation to April 2019 it was 27.4 points down.

These are the strongest monthly and annual changes in consumer confidence indices since the HNB started monitoring them, analysts of Raiffeisenbank Austria have said.

The composite consumer expectations index, which mostly refers to worsened expectations regarding the overall state of the economy in the next 12 months, dropped by 30.4 points on the month and by 39.5 points on the year. Both decreases are historically the greatest.

The composite consumer sentiment index, which points to fluctuations in the financial status of households in the last 12 months and changes in expectations regarding the economic situation and investments, dropped by 12 points on the month. The last time the index dropped this much was in April 2002, when the monthly decline was 19.6 points. Compared to April 2019, the index dropped by 8.6 points, for the first time since February 2013.

Raiffeisenbank analysts say that the Croatian economy, too, has been affected by the coronavirus pandemic and is facing a period of lower economic activity and recovery.

More economy news can be found in the Business section.

Monday, 4 May 2020

Relaxing Restrictions Leads to Increased Turnover in Retail and Hospitality

ZAGREB, May 4, 2020 - The first wave of relaxing epidemiological restrictions since April 27 has led to an increased turnover in the retail and hospitality sectors compared to the week before, but annual figures are significantly lower, according to data from the Tax Administration.

Comparing the week from April 27 to May 3 with the week from April 20 to 26, the number of fiscal receipts in all activities increased by 3% while their overall amount increased by 6%.

A total of 22.1 million receipts were issued in all activities from April 27 to May 3, with a total value of HRK 2.3 billion.

The number of receipts issued in retail increased by 4% and their value rose by 8%.

Activities of providing accommodation and serving food increased by 6% on the week with regard to the number of receipts issued, the Tax Administration said.

The first wave of relaxing restrictions to contain the spread of the coronavirus epidemic took effect at the start of last week, allowing the retail sector, except for stores in shopping centres, to reopen.

As of Monday May 4, other activities such as hairdressers, barbers, pedicurists and the like were also allowed to reopen their businesses.

In the period from April 27 to May 3 there was a decrease of 49% in the number of receipts issued year on year and a decrease of 33% in value.

Since the outbreak of the coronavirus crisis in Croatia, from February 24 to May 3 the number of fiscal receipts issued decreased by 38%, with a 24% drop in value y-o-y.

This year 265.5 million receipts were issued in that period with a value of HRK 24.9 billion, whereas last year there were 425.5 million receipts issued with a value of HRK 32.6 billion.

More economic news can be found in the Business section.

Monday, 4 May 2020

Number of Industrial Workers in March Down Year on Year

ZAGREB, May 4, 2020 - The number of industrial workers in Croatia in March remained unchanged from February, while compared with March last year it fell by 2.7%, according to data from the National Bureau of Statistics (DZS).

Month on month, the largest drop in the number of workers was recorded in tobacco production (-7.4%), while the textile industry registered the largest increase (+9.8%).

The year-on-year figures show that a majority of sectors recorded declines in employment, the sharpest fall being recorded in the manufacture of other means of transport and shipbuilding (-19.5%). The largest increases were observed in the textile industry (+7.9%) and the pharmaceutical industry (+5%).

In the first quarter of 2020, compared with the same period of 2019, the number of industrial workers decreased by 2.6%, while labour productivity shrank by 0.2%.

More economic news can be found in the Business section.

Saturday, 2 May 2020

22% Rise in Consumption in First Week of Eased Measures

ZAGREB, May 2, 2020 - In the first week since the gradual lifting of the strict lockdown measures, the consumption has risen 22%, the Večernji List daily reported on Saturday.

For the sake of comparison, the consumption in that week was lower by 16% as against the corresponding period in 2019, the newspaper said.

Nevertheless, this rise of consumption by a fifth since the lifting of some of the containment measures is whiff of optimism after the government's projections of the economic downturn by 9.4%in 2020, the daily commented.

Due to the lockdown measures to curb the coronavirus epidemic, the European Union's GDP fell by 2.7% in the first quarter and the euro area contracted by 3.3% whereas there are still no data for Croatia's economy for the said period, the Vecernji List reported.

However, Croatia introduced the containment measures in the second half of March, and the first quarter did not have to turn out negative.

A rebound in the retail trading in the first week since the ease of the measures is a good sign for entrepreneurs and that funds are coming back, the daily said in the comment on the 22% rise according to receipts issued in all activities covered by the fiscalisation system, as reported by Finance Minister Zdravko Marić.

More economic news can be found in the Business section.

Friday, 1 May 2020

IJF: Croatia Improves Budget Transparency, But There Is Room for Improvement

ZAGREB, May 1, 2020 - Croatia has made progress on the global scale of state budget transparency, and according to the survey for 2019, it ranked 21st place among 117 countries, the Institute for Public Finance (IJF) said on Thursday, pointing out that there was still a lot of room for improvement.

As the IJF announced in an analysis by Mihaela Bronić and Josip Franić, the International Budget Partnership (IBP), a non-profit organisation from Washington D.C., published on Wednesday the Budget Transparency Score for 2019, and Croatia scored 68 out of the possible 100 points, according to the Open Budget Survey (OBS).

Thus, Croatia finished 21st on the transparency scale among the total of 117 analysed countries, entering the group of countries where substantial Information is available about the central state's budget, it was stated in the press release.

Croatia has increased the availability of budget information by increasing the information provided in the Enacted Budget and Audit Report and by publishing the Pre-Budget Statement online in a timely manner, said the International Budget Partnership’s Open Budget Initiative on its website.

More economy news can be found in the Business section.

Page 2 of 43