Tuesday, 14 April 2020

HNB Releases 1.32 Billion Kuna Through Regular Open-Market Operation

ZAGREB, April 14, 2020 - The Croatian National Bank (HNB) released HRK 1.32 billion (€174m) to commercial banks on Tuesday, through a regular open-market operation with a one-week maturity and at an interest rate of 0.05%, the same as at the last four auctions.

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.

The HNB received requests for HRK 1.32 billion and granted them all. The settlement date is April 15 and the maturity date is April 22. Today's amount is HRK 200 million (€26m) lower than last week when the banks requested and received HRK 1.52 billion (€200m).

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, the largest amount provided in structural operations to date.

More economy news can be found in the Business section.

Saturday, 11 April 2020

Budget Revenues in April Decline by Two Thirds

ZAGREB, April 11, 2020 - Finance Minister Zdravko Marić said on Friday budget revenues in the first ten days of April were one-third of those at the same time last year and reiterated that at first Croatia would tap the domestic market to finance aid and deal with the fallout of the COVID-19 crisis.

Speaking on the public broadcaster HTV, he said the general assessment was that the measures the government had taken so far to help the economy were satisfactory and that Croatia was near the top in the EU in terms of their GDP share.

He said the implementation of the measures was good and that 95,000 employers had applied for aid for over 550,000 workers.

He also mentioned moratoriums on loans, programmes for exporters and new credit lines totalling €1.8 billion.

Speaking on RTL television, Marić said bilateral arrangements worth HRK 6 billion had been signed with six domestic banks with an average interest of a little over 1%. He told HTV that pension funds and other instruments would also be utilised.

Asked how much the crisis would cost, Marić reiterated that according to projections, the next three months would cost the state budget about HRK 45 billion only to ensure the functioning of the state and the economic measures.

He could not say what the budget revenues would be. He said that aside from the budget reallocations the government made yesterday, Croatia would have to borrow and that this would increase the public debt.

"If we stay the course we have taken, then the jump won't be high," he said, adding that the period after the crisis would be even more challenging.

Marić said a budget deficit could be expected this year as well as a GDP decrease, announcing that the government would present its projections soon. He added, however, that no projections, including those from world financial institutions, contained data on how long and how deep the crisis caused by the COVID-19 pandemic would be.

On Thursday, the World Bank estimated that Croatia's GDP will contract 6.2% this year, that the budget deficit will reach 8% of GDP and that the public debt-to-GDP ratio will be nearly 84%.

Marić welcomed Thursday's agreement by EU finance ministers on an economic response to the pandemic crisis.

All member states agree on short-term measures: a credit line of the European Stabilisation Mechanism (ESM), a European Investment Bank (EIB) guarantee fund, and a programme for pan-European support for short-time work arrangements (SURE), all totalling €540 billion - €240 billion from the ESM, €200 billion from the EIB and €100 billion for SURE.

Marić said Croatia could not count on ESM funds as it was not a member of the euro area. "Croatia can count on SURE, an instrument to help measures that we too are implementing to preserve jobs," he said, adding that those were no longer grant schemes but loans.

He said the finance ministers also reached a political agreement which, to come into effect, must pass certain legislative procedures. He announced that Croatia, as the country chairing the Council of the EU, would do its best to expedite the legislative part.

More budget news can be found in the Business section.

Friday, 10 April 2020

Croatia's Jan-Feb Exports up by 5.1%, Imports by 4%

ZAGREB, April 10, 2020 - Croatia's commodity exports reached HRK 18.1 billion in the first two months of 2020, up by 5.1% compared with the same period in 2019, while imports rose by 4% to HRK 29.7 billion, according to initial data released by the National Bureau of Statistics (DZS) on Friday.

The foreign trade deficit in the first two months of this year was HRK 11.6 billion, or HRK 264.3 million higher than in the corresponding period last year. Coverage of imports by exports increased from 60.4% to 61%.

Exports to EU member states rose by 2.2% to HRK 12.2 billion, while exports to non-EU countries went up by 11.6% to HRK 5.9 billion.

At the same time, EU imports increased by 2.8% to HRK 24.1 billion and non-EU imports rose by 9.4% to HRK 5.5 billion.

Viewed in euros, exports in the January-February period of 2020 reached €2.4 billion, up by 4.7% over the same period of 2019, while imports rose by 3.6% to nearly €4 billion.

The foreign trade deficit was €1.56 billion, compared to €1.52 billion in the first two months of 2019.

EU exports increased by 1.9% to €1.6 billion, and non-EU exports rose by 11.1% to €790.6 million. EU imports went up by 2.5% to €3.2 billion and non-EU imports reached €741.9 million, up 9%.

The manufacturing industry accounted for 84.2% of total exports. In January, manufacturing industry exports fell by 2% to €968.6 million.

Italy and Germany remained Croatia's main trading partners.

In January 2020, Croatia exported €154 million worth of commodities to Italy, which is 11.6% less than in January 2019, while at the same time imports from Italy increased by 6.7% to €269.4 million.

Exports to Germany decreased by 6.6% to €151.4 million and imports fell by 8.6% to €270.4 million.

January also saw a decline in exports to CEFTA (Central Free Trade Agreement) countries, of 5.6% to €178.6 million, with exports to Bosnia and Herzegovina falling by 9.4% to €97.4 million and to Serbia by 8.8% to €45.96 million.

More economy news can be found in the Business section.

Thursday, 9 April 2020

Central Bank's Council Considers Monetary, Economic Trends

ZAGREB, April 9, 2020 - The Croatian National Bank (HNB) Council on Wednesday discussed recent monetary and economic trends, informing in a press release about the measures which the HNB has undertaken to maintain the liquidity and stability of the financial system during the COVID-19 pandemic.

The rising uncertainty and fear of a swift spread of the pandemic as well as the measures introduced to contain it resulted in highly volatile international financial markets in late February and March.

Increased pressure on the exchange rate as well as on the securities market has left a mark on trends both in developed and emerging markets, including Croatia. At the end of March, the euro-kuna exchange rate was 2% higher than at the end of February and yields on sovereign bonds and the risk premium also increased.

Since early March, the HNB has launched numerous monetary policy measures, maintaining the liquidity and stability of the financial system.

In March, it made five interventions on the foreign exchange market and several direct transactions, selling banks a total of €2.5 billion. The HNB also released HRK 3.8 billion to banks in a structural operation and HRK 1.85 billion in regular ones.

The required reserves rate has been reduced from 12% to 9%, increasing banks' available funds by HRK 6.33 billion. In order to maintain stability on the sovereign bond market, at the end of March the HNB bought state securities totalling a nominal HRK 4.29 billion.

The annual grown of bank lending increased to 4.8% in February as a result of higher lending to non-financial companies, while the annual growth of household lending mildly slowed down.

More economic news can be found in the Business section.

Wednesday, 8 April 2020

More Than 150,000 Registered as Unemployed

ZAGREB, April 8, 2020 - The number of people registered with the Croatian Employment Service (HZZ) as of Tuesday has exceeded 150,000 and over the past three weeks alone 21,649 registered as unemployed, 20,071 of whom lost their jobs.

On March 16 there were 134,717 registered as unemployed while on April 7 that number increased to 150,308, which is an increase of 15,591 or 11.6%, HZZ data forwarded to Hina on Wednesday indicates.

The HZZ notes that due to the extraordinary circumstances caused by the coronavirus epidemic, evidence was being kept on a daily basis of people registering or being erased from the unemployment register, particularly those who lost their jobs.

Data indicates that in that period 21,649 people registered as being unemployed, of whom, 20,071 had lost their jobs.

At the same time 6,314 were struck from the register, of whom 4,684 had found jobs.

According to daily data on the HZZ web site, currently there are 150,372 unemployed people and 7,994 advertised vacancies.

The HZZ informed that as of Tuesday it had received 95,211 applications from employers for support to save jobs in those activities affected by the epidemic, which encompasses 559,000 workers, and that more than HRK 700 million had been paid out in support.

The HZZ said that it planned to pay out wage support for March by April 10 for all applications submitted by midnight Tuesday.

HGK analysts estimate government's measures should slow jobless growth

Croatian Chamber of Commerce (HGK) analysts estimate that the first direct measures to preserve jobs, which initially envisaged aid in the amount of the minimum wage (HRK 3,250 for March), subsequently raised to HRK 4,000 for April and May, without the payment of contributions, should slow the jobless growth by enabling employers to keep more workers.

"Since HZZ data show a slowing down of the daily growth of the unemployed over the past three days, one can conclude that the adopted measures have stopped a higher unemployment growth for now. According to the latest information, 94,000 employers have requested that aid for about 550,000 employees, therefore a little over one third of all employed," the HGK said in a press release.

More economic news can be found in the Business section.

Wednesday, 8 April 2020

Public Debt at 73.2% of GDP at End of 2019

ZAGREB, April 8, 2020 - Croatia's public debt at the end of 2019, expressed according to the ESA 2010 methodology, totalled HRK 293 billion or 73.2% of GDP, which is 1.6 percentage points less compared to the end of 2018, shows data from the Croatian National Bank (HNB).

The share of public debt in GDP thus dropped for the fifth consecutive year but in absolute terms, at the end of last year it was HRK 6.9 billion higher than at the end of 2018.

The factors that contributed to the relative decrease of public debt last year were the continuation of favourable fiscal trends, which reduced the state's need for borrowing, a high level of liquidity and the continuation of a period of low interest rates, say analysts of Raiffeisen Bank (RBA).

That, they say, improved borrowing terms on the domestic and international financial markets and contributed to a lowering of interest rates, which reduced interest expenses and improved the debt maturity structure.

The analysts say that the drop in the share of public debt in GDP is also the result of a solid real economic growth of 2.9%.

According to the currency structure, the external component of public debt (HRK 95.8 billion) dropped by eight billion kuna on the year or 8.6% while the internal component grew by 8.7% to HRK 197.2 billion, accounting for 67.3% of the total public debt.

Considering the coronavirus pandemic, unfavourable economic trends will not bypass Croatia either and the government's measures designed to help alleviate the slowing down or suspension of economic activity require a significant increase in the expenditure side of the budget, the analysts say.

They believe that the state will resort to new borrowing on financial markets to bridge the budget deficit, either through credit lines or on capital markets, which, they say, coupled with the decline in economic activity, will have a negative impact on the general government's public debt, both in nominal and real terms.

That is why apart from a decline in economy analysts also expect the share of the general government's debt in GDP to increase to above 80%, which was last recorded in 2016.

They say that an additional factor that will contribute to an increase in the share of the debt in GDP is the weakening of the kuna in relation to the euro.

More economic news can be found in the Business section.

Monday, 6 April 2020

New Car Sales Sink by 46% in March

ZAGREB, April 6, 2020 - A total of 2,724 new passenger cars were sold in Croatia in March 2020, which is 45.9% fewer than in the same month of 2019, the Promocija Plus market research agency said on Monday.

The best-selling car model was the Skoda Octavia, with 130 units sold, ahead of the Volkswagen T-Cross (99), the VW Golf (84), the Dacia Duster (82) and the Suzuki Vitara (71).

In the first quarter of this year, sales of new cars fell by 17.4% to 10,029 vehicles compared with the same period in 2019.

During the first three months of the year, Volkswagen vehicles topped the sales list with 1,661 new cars sold, followed by Skoda (1,481), Renault (657), Dacia (583), Hyundai (525) and Suzuki (524).

Most of the new cars sold used petrol for fuel - 5,855 vehicles or 58.4%, while 3,492 vehicles (34.8%) were fuelled by diesel, 62 were electric cars (0.6%) and 555 were hybrids (5.5%).

Transport expert Željko Marušić told Hina that this was just the beginning of a major crisis for the car industry and that new car sales would be drastically falling in the months ahead.

"Many people's livelihoods are already at risk and they will not be thinking of buying even a used car, let alone a new one," Marušić said, adding that "sales will not return to their previous levels for a long time." He said that new car sales in Croatia could plunge by as much as 70% in the coming months.

More economic news can be found in the Business section.

Monday, 6 April 2020

Lawmakers Appeal to Government to Help Farmers and Socially Vulnerable Groups

ZAGREB, April 6, 2020 - Croatian lawmakers on Monday again appealed to the government to help local agricultural producers and vulnerable social groups affected by the coronavirus crisis.

Mladen Mađer of the Work and Solidarity Party called on the government to urgently arrange a meeting with retail chains and agree purchases of local produce. He also called for urgent reopening of farm produce markets and for greater flexibility in issuing passes so that farmers can work their land.

"We must allow small family farms to sell their produce or otherwise we will destroy the little production that we have," Mađer said.

Tomislav Panenić of the Independent Youth List also appealed to the government to help agricultural producers and small family farms, saying that online sales would not solve their problems. "The Ministry of Agriculture should be more efficient because amending just one law is not enough," he said.

Social Democratic Party (SDP) leader Davor Bernardić recalled that his party had drawn up a third package of 10 measures worth HRK 1.7 billion (€224m) to alleviate the consequences of the crisis for more than a million socially vulnerable people.

"In just several weeks of the crisis 20,000 have been laid off and another 400,000 fear losing their jobs," Bernardic warned.

Bozo Petrov of the Bridge party also proposed measures to protect the socially most vulnerable citizens, those with blocked bank accounts, the unemployed and seasonal workers. He called for a moratorium on loan repayments and enforcement proceedings. "If everyone else is entitled to a break, then they are too," he said.

Hrvoje Zekanović of the Croatian Sovereigntists party said that the successful establishment of the e-pass system had shown that electronic voting could be organised as well. "Now we can see that it can be done very quickly and easily," he said.

Goran Beus Richembergh, speaking on behalf of the Civic Liberal Alliance (GLAS) and Croatian Pensioners' Party (HSU) group, said that the present situation should not be allowed to be used for stigmatising people and spreading hatred, stressing the importance of preserving the democratic institutions.

More coronavirus news can be found in the Lifestyle section.

Monday, 6 April 2020

Highest Sales Growth Recorded in Second Week of March

ZAGREB, April 6, 2020 - The results of an analysis of consumer behaviour in Croatia during the coronavirus epidemic, conducted by the global data analytics company Nielsen, have shown that the highest sales growth was recorded in the second week of March and that there are six stages of consumer behaviour during this crisis.

The first stage is proactive health-minded buying, which started at the end of February.

The first case of the coronavirus infection in Croatia was confirmed on February 25, and already in the week from February 23 to February 29 there was a significant increase in the sales of certain products compared to the same week last year. For example, tinned fish had a sales increase of 159%, pasta of 114%, flour of 108%, and rice of 97%.

The highest sales growth occurred in the second week of March, from March 9 to March 15, when retail chains saw an average increase of 65% on the year in the shopping basket value.

According to Nielsen, shoppers then entered the second stage of consumer behaviour - pantry preparation.

In that period, the sales of flour rose by 410% on the year and the sales of rice by 301%. When it comes to drugstore products, soap saw a sales increase of 232%, and toilet paper of 162%.

Nielsen says that in the third week of March, from March 16 to March 22, sales growth rates slowed down due to a decline in store visits and operational restrictions in the retail sector.

The decline in store visits did not result in lower consumption, and the shopping basket value had an increase of 46% on the year. That was the third stage - quarantined living preparation.

Nielsen says that we are currently in the fifth stage, restricted living, which will be marked by demand for online shopping services and when everything will depend on high delivery standards.

The final, sixth, stage will be when people return to their daily routines and that will be living a new normal, Nielsen says, adding that consumers will focus more on their health and hygiene practices.

The concern shared by consumers in Croatia and around the world, as well as the effect of new behaviour will decrease over time, but it will not go away completely. Companies that recognise that as soon as possible and adapt to new needs will succeed, Nielsen said.

More coronavirus news can be found in the Lifestyle section.

Sunday, 5 April 2020

SSSH: Employers Should Be Entitled to Subsidies If They Re-Employ Sacked Workers

ZAGREB, April 5, 2020 - The SSSH trade union federation suggested on Sunday that companies that had fired workers due to the corona crisis should be entitled to job retention subsidies provided that they hired the same workers on a permanent basis.

The SSSH recalls that it has recently called on employers not to panic and hastily dismiss workers, urging them to show patience, social responsibility and dialogue.

Following the latest set of measures proposed by the government to prop up businesses and save jobs, the Croatian Employers' Association (HUP) earlier on Sunday welcomed the announcement by the Labour Ministry that grants for saving jobs during the corona crisis will also be made available to companies that were forced to lay off workers before the latest set of government measures.

The HUP said on Sunday that it was pleased with the ministry's announcement that the Croatian Employment Service (HZZ) steering board would on Monday grant the HUP's request that employers who had had to dismiss workers due to the crisis, before the government designed the so-called April package of measures, would also be entitled to subsidies as envisaged in that latest set of measures.

The SSSH said today that it also supported the HUP's request for enabling employers who dismissed in a hastily manner workers at the start of the corona crisis to apply for subsidies provided that they re-employ those workers on a permanent basis.

The SSH also called for prevention of misuse of state subsidies.

More coronavirus news can be found in the Lifestyle section.

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