Thursday, 30 April 2020

Consumption in March Decreases by 7%, Biggest Drop since 2010

ZAGREB, April 30, 2020 - Consumption in Croatia in March dropped 7% from the same month of 2019, which is its biggest decline since 2010, when the economy was in a recession.

The national statistical office (DZS) on Thursday published a report on retail sales and according to working-day adjusted data, consumption in March dropped 11.7% from the previous month and by 7% in relation to March 2019.

This is a sudden change in trends considering that in February retail trade grew by 4.9% on the year.

The steep decline in consumption is due to restrictions imposed to prevent the spread of the coronavirus, which took effect in the second half of March.

A decline in retail trade of 7% had not been recorded since January 2010, when the economy was in a recession.

More economic news can be found in the Business section.

Thursday, 30 April 2020

Industrial Output Down Close to 5%

ZAGREB, April 30, 2020 - Industrial production in Croatia in March 2020 dropped for the fifth consecutive month, sliding by 4.9% from the same month of 2019, and much faster than the month before.

According to figures from the national statistical office, industrial output in March dropped by 2.8% from the previous month, while in relation to March 2019 it went down by 4.9%.

March was the fifth consecutive month to see a year-on-year decrease in industrial output, with the decline picking up in March as the month before industrial output dropped by 2.1%.

The production of durable consumer goods dropped the most year on year, by 23.5%, followed by the production of capital products, which decreased by 14.8%.

Only energy production saw an annual increase, of 9.8%.

In the first three months of this year, industrial output dropped by 4.2% in relation to the same period of 2019.

Since the Croatian economy is largely connected with the European economy, the strong contraction of economic activity in the EU will spill over to the national economy, analysts of Raiffeisenbank Austria (RBA) said.

The EU's statistical office Eurostat said on Thursday that the EU's GDP in Q1 had dropped by 2.7% from the same period of 2019 due to the coronavirus crisis, which is its greatest decline since the global financial crisis of 2009.

The RBA analysts said that trends in industrial production would depend on the success of the fight against the coronavirus pandemic and the duration of restrictions on economic activity, which would slow down recovery.

After a modest growth rate of 0.5% in 2019, industrial output in 2020 could see a double-digit drop, the analysts said.

More economic news can be found in the Business section.

Thursday, 30 April 2020

Unemployment Figures Increase in April for First Time in Recent History

ZAGREB, April 30, 2020 - At the end of April there were 158,795 unemployed persons in Croatia, which is 15,300 more than in March and 27,700 more than at the end of April 2019, and this is the first time in the country's more recent history that unemployment has increased in April, the Croatian Chamber of Commerce (HGK) has said.

This is the first time in Croatia's recent history that unemployment has increased in April on the month and the first time since 2013 that it has increased year on year in that month, the HGK said.

It recalled that April was the first whole month in which business and consumption had taken place in restricted conditions and that most of the month had been spent in quarantine, with restrictions being partially lifted only in its last week.

"In the first few days of the month, increased pressure on the employment office was evident, with the trend of the daily growth of unemployment being somewhat relieved after the government's second set of measures designed to help save jobs," the HGK said in a press release.

The HGK believes that as restrictions are gradually lifted, the number of people registering as unemployed will decline.

However, the higher level of unemployment will probably remain due to the absence of seasonal employment this year.

The usual downward curve in unemployment in the middle of the year will probably be a lot straighter this year mostly due to the absence of mass employment in tourism, the HGK said, adding that only 424 people were removed from the unemployment register in April to take up jobs in the accommodation and hospitality sector, whereas last year that number was 7,120.

More economic news can be found in the Business section.

Wednesday, 29 April 2020

Expectations for Croatia's Economy Sink

ZAGREB, April 29, 2020 - Expectations for Croatia's economy sank in April to the lowest level since the European Commission started collecting data, reflecting the pessimism of business people in the European Union and euro area as a consequence of the coronavirus pandemic.

The Economic Sentiment Index (ESI) sank in Croatia by 31 points in April compared to March, dropping to 72.3 points, which is its greatest drop and lowest level since the EC started publishing reports on ESI.

The lowest ESI has been recorded in all sectors except in construction while the services and retail sectors had the most negative sentiment, with a drop of 49 and 47.8 points respectively compared to March.

Industry confidence and construction confidence fell by 27.8 and 28.9 points respectively.

The mildest decrease of 'only' 17.9 points was recorded in consumer confidence which did not plunge to its lowest level, recorded during the height of the euro area crisis in 2009.

The employment expectations indicator too fell drastically, by 29 points on the month, to 76.4 points.

The ESI crashed in April in the EU 27 and euro area and it was its strongest monthly decline on record (since
1985), surpassing by far the previous negative record from March.

In April the ESI in the EU declined by 28.8 points to 65.8 points while in the euro area it dropped by 27.2 points to 67 points.

The pandemic has impacted the most expectations in the services sector due to a ban on travel and hotels, restaurants and cafes remaining closed.

As for the largest euro area economies, the ESI crashed in Germany by 19.9 points, in France it dropped by 16.3 points and in Spain it went down by 26 points, while no data could be collected in Italy due to the strict confinement measures.

More economy news can be found in the Business section.

Wednesday, 29 April 2020

Budget Projections on Thursday “Won’t Be Nice”

ZAGREB, April 29, 2020 - The government will outline new macroeconomic and budget projections on Thursday, and Finance Minister Zdravko Marić warned on Wednesday that the figures would not be nice due to the consequences of the COVID-19 epidemic.

"Unfortunately, this is our reality, those consequences of the coronavirus" Marić said while coming to ta meeting of the inner cabinet in Zagreb.

A new national programme of reforms and convergence plan are to be added to the government's agenda on Thursday.

Marić today declined to answer questions whether the downward trends would be expressed in double-digit figures.

He dismissed reporters' speculations that the government underperformed in the implementation of the national reforms programme, and countered that the implementation had to date been at a level of 80% while the remaining part could not be fulfilled due to the outbreak of COVID-19.

Marić pointed out progress in making the country ready for the adoption of the euro.

More economic news can be found in the Business section.

Monday, 27 April 2020

HNB Releases 1.17 Billion Kuna Through Regular Open-Market Operation

ZAGREB, April 27, 2020 - The Croatian National Bank (HNB) released HRK 1.17 billion (€155m) to commercial banks on Monday, through a regular open-market operation with a one-week maturity and at an interest rate of 0.05%.

Regular open-market operations are one of the measures taken by the central bank to increase the liquidity of the banking system for the purpose of maintaining exchange rate and financial stability amid the crisis caused by the coronavirus epidemic in the country.

Today's amount is HRK 100 million higher than last week, when HRK 1.07 billion (€141m) was released at 0.05% interest and with a maturity until April 29.

For today's auction the HNB had received requests for a total of HRK 1.17 billion and granted them all. The settlement date is April 29 and the due date is May 6.

On March 16, the HNB conducted a structural operation, releasing HRK 3.8 billion (€500m) to the banks with a maturity of five years and at 0.25% interest.

In the past weeks the central bank has also undertaken other measures to increase the liquidity of the banking system, including purchases of government bonds. Last month it carried out two fine-tuning operations buying HRK 4.29 billion worth of government bonds. It has announced the next such auction for Tuesday.

More economy news can be found in the Business section.

Monday, 27 April 2020

Provision on State of Emergency Should Be Urgently Added to Labour Act

ZAGREB, April 27, 2020 - A provision on a state of emergency should be urgently added to the Labour Act because of the payment of wages during the coronavirus pandemic, and the regulation of workers' entitlements should be simplified in the conditions of reduced business activity, the Croatian Employers' Association (HUP) said in a statement on Monday.

On the first day of relaxed restrictions and ahead of a meeting of the Economic and Social Council, the HUP called on the social partners to discuss urgent amendments to the Labour Act.

The coronavirus pandemic has disrupted business activities through no fault of employers or workers, as a result of which businesses were forced to cease their operations and were left with reduced or no income, the HUP said, adding that employers cannot meet all the obligations under employment contracts and that it is no time for a dramatic increase in unemployment.

HUP director-general Davor Majetić said that the relief measures undertaken by the government had helped overcome the initial shock to the economy caused by the pandemic.

"Now is the time for businesses to overcome the negative consequences. The Labour Act does not provide for a state of emergency and we need to change that. The sets of government measures will become effective in May, but that does not mean that the circumstances will change for the enterprise sector for at least another three months. Employers cannot be expected to maintain the pre-crisis level of wages in all sectors. We have to get the wheel of the economy going by the autumn and no one can guarantee what the epidemiological situation will be like at that time of year. A state of emergency must be defined by the law," Majetić said in the statement.

The HUP said that in the circumstances of reduced income and increased costs many companies would be facing the challenges of how to keep jobs and ensure the necessary conditions to continue their business.

It said that labour legislation should simplify administrative arrangements for employment contracts, registration of workers, records of hours of work, job changes, recording of work performance, and work from home.

More economy news can be found in the Business section.

Monday, 27 April 2020

Croatia's Sales of New Cars in First Three Weeks of April Plunge by 87.4%

ZAGREB, April 27, 2020 - A total of 893 new passenger and light delivery vehicles were registered in Croatia in the first three weeks of April, a decline of 87.4% compared with the same month last year, the Promocija Plus market research agency said on Monday.

Between April 1 and 22, only 893 vehicles were registered (698 passenger cars and 195 light delivery vehicles), compared to 7,136 vehicles in April 2019.

A total of 12,888 new vehicles were sold from the start of the year to April 22, a decrease of 40% compared with the same period in 2019 when 21,542 new vehicles were sold.

In the year to April 22, the best-selling car brand was Volkswagen, with 2,172 units sold, ahead of Skoda (1,613), Renault (1,146), Dacia (730) and Citroen (639).

The decline in new car sales in April was expected as the economy was paralysed by restrictions imposed due to the coronavirus pandemic.

More economy news can be found in the Business section.

Friday, 24 April 2020

Meeting Between Unions, Government Ends, Negotiations to Follow

ZAGREB, April 24, 2020 - Trade unions representing public and civil servants on Thursday wrapped up consultations with government representatives with the conclusion that official negotiations on salaries and basic collective agreements would follow, due to the economic crisis caused by the coronavirus pandemic.

"We talked about the economic and health safety situation in light of the coronavirus pandemic. We exchanged opinions on how we see certain government measures and their effects. Official negotiations will follow. We expect to.... agree on solutions to all financial challenges the government is facing, which will be to the satisfaction of employees," Labour and Pension System Minister Josip Aladrović said after a three-hour meeting.

Aladrović said that for the time being he "would not dare say" that pay cuts were necessary.

"During the entire meeting the word 'cuts' was never mentioned. We have to put the benefits of state and public servants on the table and talk about them. I am hoping for a certain consensus," Aladrović said.

The minister also said what would happen with a recently agreed increase in the wage index for education employees.

"That was not on the table today. However, I am confident that during the negotiations we will open that issue," Aladrović said.

Union representative Vilim Ribić underscored that if something was necessary, it should not be called solidarity but necessity.

"I would not say that there was understanding at the meeting, rather polemics and opposite opinions. There was a lot of discussion about the economic purpose of salaries in the state and public sector. Our opinions on the issue were opposite. We also discussed when these interventions will take place and who will be affected by them," Ribić said.

He warned that none of the EU countries was cutting salaries at the moment and that all economic experts said pay cuts would be counterproductive. "Even the Croatian National Bank governor has said that now is not the right time," Ribić said.

More economy news can be found in the Business section.

Wednesday, 22 April 2020

Croatia's Government Surplus 1.55 Billion Kuna in 2019

ZAGREB, April 22, 2020 - In 2019, the consolidated general government surplus amounted to HRK 1.55 billion, or 0.4% of GDP, while the consolidated general government debt amounted to HRK 293 billion or 73.2% of GDP, shows a report on the Excessive Deficit Procedure by the national statistics office, published on Wednesday.

In 2018, Croatia saw a consolidated government surplus of HRK 850 million or 0.2% of GDP while the consolidated government debt amounted to HRK 286 billion or 74.4% of GDP.

The official statistics indicate that 2019 was the third consecutive year that the government achieved a general government surplus while the debt to GDP ratio continued to decrease thanks to a nominal increase in GDP.

The surplus was mostly owing to a considerably improved financial result of extrabudgetary beneficiaries and public companies and increased tax revenues.

In 2019, taxes on production and imports totalled HRK 81.3 billion, an increase of 6% on the previous year.

Investments also grew by 27.6% to HRK 17.2 billion but last year was also marked by payments of government guarantees for shipyards amounting to HRK 1.78 billion, which impacted the surplus, DZS said.

At the end of 2019, the consolidated general government debt increased by HRK 6.9 billion, up 2.4% compared to the end of 2018. Of that amount, HRK 5.7 billion was net borrowing while the rest is attributed to positive exchange rate changes in the kuna against the euro.

The debt-to-GDP ratio fell by 1.5 percentage points compared to 2018 and stood at 73.2% of GDP at the end of 2019.

Last year the government adopted a budget based on an expected economic growth of 2.5%, a consolidated general government surplus of 0.2% of GDP or HRK 629 million, and a public debt to GDP ratio of 71.3%, however, with the outbreak of the novel coronavirus, which is seriously affecting the economy, it will be difficult to achieve those goals, the DZS said in its report.

More economy news can be found in the Business section.

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