Friday, 7 February 2020

New Law on Foreigners Introduces New Rules for Their Employment in Croatia

ZAGREB, February 7, 2020 - The government on Thursday sent to the parliament a bill on foreigners with new regulations on their employment in Croatia, and the government will no longer have the duty to set quotas for the employment of foreign nationals.

Under the bill, employers shall contact the Croatian Employment Service (HZZ) when planning to recruit new workers, and the HZZ will provide them with its opinion after testing the labour market.

If it is established that there are no jobless people registered with the HZZ with the qualifications specified in the request submitted by the employer, the HZZ will give a green light for hiring foreigners. After that, the employer concerned can submit a request to the relevant police stations to issue permits for the employment and stay of foreigners, Interior Minister Davor Božinović said at the government's session.

Under the bill, the issuance of a permit can take 45 days at the most, and in the case of professions and occupations in high demand the procedure should not take more than 15 days, while requests for seasonal employment should be granted in 10 days' time.

The HZZ is also supposed to define the cases that do not require testing the labour market before recruitment.

The new legislation will also introduce the institute of long-term residents who are non-EU citizens.

Also, rules for the temporary or long-term stay of foreign nationals of the Croat ethnic background will be relaxed.

More employment news can be found in the Business section.

Thursday, 6 February 2020

HNB Governor: Positive Economic Trends Continue

ZAGREB, February 6, 2020 - Croatian National Bank (HNB) Governor Boris Vujčić submitted a report on the implementation of monetary policy in 2018-2019 to Parliament on Wednesday, saying that positive economic trends continued on the labour market with increased employment and wages.

"We also saw increased personal spending which led to GDP growth of 3.1%, while the positive effects on exports after Croatia's accession to the EU were decreasing as expected," Vujčić said.

He added that the HNB was pursuing an expansionary monetary policy, securing liquidity on the capital market and exchange rate stability. Interest rates dropped to record lows, while international reserves were at their historically highest levels.

Croatia is a highly euroized country and the adoption of the euro would have multiple benefits for the country, the central bank governor said. He expressed regret that criminal complaints filed against the HNB were used as "political marketing" and added that such behaviour should be sanctioned.

Marin Škribola of the Youth Independent List asked the governor what had been done about the attempt by RBA bank to exert pressure on the Constitutional Court in connection with the court case concerning CHF-denominated loans. Expressing a suspicion that other banks had tried the same, he accused the central bank of defending the interests of banking institutions rather than Croatian citizens and warned that they would be closely monitoring the HNB's steps in that regard.

Vujčić said that the matter was being looked into and after the examination was over, the HNB would respond accordingly. He recalled that RBA's board chairman had resigned in the meantime.

Miro Bulj of the MOST party said that the HNB should be more engaged in protecting the interests of Croatian citizens, while Ivan Lovrinović of the Živi Zid and Let's Change Croatia group said that the HNB, along with the judiciary, was the main destabiliser of the Croatian society, state and economy.

Lovrinović said that a good part of the shipbuilding industry, as well as the wood processing industry, had collapsed because of the central bank's exchange rate policy, adding that the economic policies of the HDZ and SDP parties had forced 300,000 citizens to leave the country in search of better livelihoods.

Lovrinović said that CHF loans, granted by eight banks, were toxic and had landed half a million people in financial trouble, while the HNB had done nothing to protect them. He said that the HNB should support growth and development rather than banks in loansharking the citizens. He concluded by saying that the HND should be brought under democratic oversight.

More economic news can be found in the Business section.

Tuesday, 4 February 2020

Croatia Among Six EU Countries Where Average Pay Is Lower Than 10 Years Ago

ZAGREB, February 4, 2020 - Croatia is among six EU countries where workers' pay packets are lower on average than ten years ago, show data from the European Trade Union Institute (ETUI).

In the period from 2010 and 2019 average pay packets, adjusted for inflation (and including social security contributions and pay benefits), went down in Croatia by five percent.

The latest ETUI data show that pay packets also went down in Italy, by 2%, in Spain and Portugal, by 4% each, in Cyprus, by 7%, and in Greece, by 15%.

ETUI notes that average pay packets practically froze with barely above zero increases over the last decade in Finland (0.1%), Belgium (1.5%) and the Netherlands (1.5%).

"Working people in six EU countries are worse off than they were 10 years ago," said Esther Lynch, ETUC Deputy General Secretary.

"EU leaders like to talk up the so-called recovery but the crisis is not over for millions of working people in many EU countries."

"The EU must do much more to promote increases in wages and in minimum wages, and to support stronger collective bargaining in almost all EU member states," Lynch said.

More economy news can be found in the Business section.

Thursday, 30 January 2020

EU Unemployment Rates Fall in December, Croatia Close to EU Average

ZAGREB, January 30, 2020 - Unemployment in the European Union in December 2019 fell to its lowest level since the EU statistical office Eurostat began publishing monthly data, and there was a slight fall in Croatia as well, which puts Croatia close to the EU average, Eurostat said in a report published on Thursday.

The EU28 seasonally adjusted unemployment rate, based on the definition recommended by the International Labour Organisation (ILO), was 6.2% in December 2019, falling by 0.1% compared to November. This is the lowest rate recorded in the EU28 since the start of the EU monthly unemployment series in January 2000.

The same fall was recorded in the euro area, where seasonally adjusted unemployment fell to 7.4%, the lowest level since May 2008.

In December 2018, the EU28 unemployment rate was 6.6%, and in the euro area it was 7.8%

Eurostat estimates that 15.457 million men and women in the EU28, of whom 12.251 million in the euro area, were unemployed in December 2019.

The number of unemployed citizens decreased by 80,000 in the EU28, and by 34,000 in the euro area.

Compared to December 2018, the number of unemployed people in EU28 decreased by 747,000, and by 592,000 in the euro area.

Among EU member states for which Eurostat acquired data, the lowest seasonally adjusted rate was marked in Czechia (2%), followed by Germany and the Netherlands (3.2%).

In Croatia, the seasonally adjusted unemployment rate measured using ILO methodology was 6.4% in December 2019, decreasing by 0.1% compared to November. It is the lowest recorded level since Eurostat first measured it.

In December 2018, the unemployment rate was 7.3%, making Croatia one of the EU member states with the sharpest decrease in unemployment on a yearly basis, together with Greece and Bulgaria.

According to Eurostat, there were 115,000 unemployed people in December 2019 in Croatia, that is 1,000 fewer compared to November. Compared to December 2018, the number of unemployed people fell by 17,000 in December 2019.

The highest unemployment rates in the EU were recorded in Greece (16.6% in October), followed by Spain (13.7% in December).

More economy news can be found in the Business section.

Thursday, 23 January 2020

Gross Foreign Debt to GDP Ratio 81%

ZAGREB, January 23, 2020 - At the end of the third quarter of 2019, Croatia's gross foreign debt to GDP ratio amounted to 80.9%, which is 1.7 percentage points less than at the end of 2018, Croatian National Bank (HNB) data indicate.

In absolute numbers the debt increased by 1.3% compared with December 2018 and amounted to 43.3 billion euro at the end of September 2019. The HNB notes that the increase was impacted by cross-currency changes and other adjustments.

Broken down by sector, the greatest portion of the debt (39%) can be attributed to other sectors or companies.

The gross foreign debt of companies at the end of Q3, 2019 amounted to €17.1 billion. The general government's foreign debt amounted to €14.4 billion, and accounted for 32.6% of the overall debt, while the share of dues by other monetary institutions decreased to 8.1% or €3.6 billion due to strong deleveraging over the past several years (2012 - 2018).

The increase in foreign debt in the first nine months of last year was generated by an increase in liabilities by the public sector with its gross foreign debt to foreign creditors amounting to €17.6 billion at the end of September 2019, an increase of 6.4% or €1.1 billion compared with the end of 2018.

With its debt of €14.4 billion, the government was the greatest public sector debtor, with its debt increasing by €414 million from the end of 2018 while the central bank's debt of €2 billion was €390 million or 23.6% higher than at the end of 2018.

The non-guaranteed debt of the private sector at the end of September 2019 was slightly below the level recorded at the end of 2018 and amounted to €25.5 billion.

More news about economy in Croatia can be found in the Business section.

Friday, 10 January 2020

Additional Macroprudential Measures to Be Available to HNB

ZAGREB, January 10, 2020 - In 2020 the Croatian National Bank (HNB) will have additional macro-prudential measures at its disposal and it will impose them on commercial banks to maintain the financial system's stability, and the exchange of data on customers' creditworthiness will be reintroduced, according to some of the draft acts that are to be adopted.

In late 2019, the Finance Ministry put to public consultation a set of draft acts adjusted to the European acquis within the context of steps which should be taken on Croatia's journey towards the euro area. The public consultation lasted until this week.

One of the steps is a letter which Croatia sent in 2019 considering its admission to the Exchange Rate Mechanism (ERM II).

The letter of intent expresses Croatia's intention to enter the exchange rate mechanism and to implement 19 measures in six areas in the next 12 months on the path towards the introduction of the euro as the official currency.

In this regard, Croatia is set to amend the legislation on credit institutions to enable the exchange of data on customers regarding the assessment of their creditworthiness.

Some 15 years ago a score of commercial lenders operating in Croatia set up a register of credit obligations of customers (HROK) enabling those lenders to exchange information on credits taken by customers.

However, the General Data Protection Regulation (GDRP), introduced by the European Union in mid-2018, eliminated this register.

The latest amendments provide for legal security in the exchange of information between banks for the purpose of assessing their customers' creditworthiness.

Also, one of the novelties is that it will be the HNB and not the Croatian Banking Association that will calculate the national reference rate of the average cost for financing the banking system. The abbreviation in Croatian for this rate is NRS.

The outcome of a comprehensive stress test for five leading Croatian banks, conducted by the European Central Bank (ECB), will be announced in May.

The set of amended laws will enable the Croatian central bank to impose measures if they turn out to be necessary in accordance with the stress tests' outcome.

More economy news can be found in the Business section.

Thursday, 9 January 2020

World Bank Raises Croatia's 2019 and 2020 Growth Forecast

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.

More economy news can be found in the Business section.

Wednesday, 8 January 2020

Economic Sentiment in Croatia Unchanged in December

ZAGREB, January 8, 2020 - Expectations in Croatia's economy in December 2019 remained virtually unchanged compared to November 2019 riding on the wave of optimism in the construction sector as a counterbalance to pessimism in the retail sector, says a report released by the European Commission on Wednesday. The Economic Sentiment Indicator (ESI) rose in December by 0.3 points to 114.4 points. In November it increased by 0.8 points.

Expectations in the construction sector improved the most, with the ESI going up by 4.8 points. The industry sector followed with a growth of 1.1 points.

Consumer sentiment remained almost unchanged compared to November, increasing by 0.2 points.

There was a significant decline in expectations by managers in the retail sector. with a decline in retail confidence of 3.5 points compared to November. Managers expressed significant pessimism in the services sector too, with the ESI falling by 2.2 points, the EC reported.

In December 2019, the ESI remained broadly unchanged in the EU, remaining stable at 100.0 points.

The most marked increase was recorded in services and construction confidence increasing by 1.6 and 1.5 points respectively, followed by retail with an increase of 0.5 points.

Consumer confidence deteriorated slightly by 0.3 points.

A significant decline was recorded in industry confidence, declining by 0.7 points.

The headline indicator for the EU remained stable in December (±0.0) at its long-term average. Concerning the two largest non-euro area EU economies, the ESI worsened in both the UK (-2.4) and Poland (-1.2), the EC reported.

More economy news can be found in the Business section.

Thursday, 2 January 2020

Croats' Spending Reaches 16 Billion Kuna in December

ZAGREB, January 2, 2020 - During December 2019, Croatians spent nearly 16 billion kuna, according to figures provided by the Finance Agency (FINA) to the Croatian Chamber of Commerce (HGK) on Thursday when the chamber pointed out that spending this December was a billion kuna higher than in December 2018.

During December 2019, FINA processed receipts worth 15.8 billion kuna, and this means that we spent a billion kuna more than in December 2018, says Tomislava Ravlić of the HGK.

This positive trend in spending is a result of the steady rise in wages due to the tax reforms, she explained.

Also, the analysis of the expenditure on Christmas presents shows that two thirds of Croatians spent between 100 and 1,000 kuna on those presents, and one fifth set aside higher amounts of money for that purpose.

As much as 31.5% of those polled spent between 100-500 kuna on Christmas presents for their dearest ones, whereas 31.8% spent between 500 and 1,000 kuna for that purpose, and 20.8% spent more than 1,000 kuna, Ravlić explained.

Also, every tenth respondent says they spent less than 100 kuna on presents in December, and a mere 2.3% of those polled say they have not bought any presents at all.

Broken down by type of recipients of presents, family members top the list (84%) and are followed by those who are described as loved ones (56%) and friends (53%), while the lowest percentage went on business partners (17%).

Broken down by type of goods purchased as presents, cosmetic products top the list (39%), followed by clothes and footwear (35%) and children's toys (31%), the HGK says.

The survey was conducted among 300 respondents in four big cities: Zagreb, Rijeka, Osijek and Split.

More economy news can be found in the Business section.

Wednesday, 1 January 2020

Economy Sector Ministries Have Ambitious Plans for 2020

ZAGREB, January 1, 2020 - Ministries in charge of the economy have ambitious plans for 2020 including the construction and reconstruction of roads, railways and ports as well as improving macroeconomic indicators and the business climate which should lead to improvement of standard for citizens and facilitate doing business for entrepreneurs.

The Finance Ministry says that the 2020 budget is directed to further tax reliefs of 2.3 billion kuna for workers and entrepreneurs.

The ministry forecasts that intake of EU funds in 2020 will amount to 18.1 billion kuna and that the trend of decreasing the public debt to GDP ratio will continue.

Croatia is also due to enter the European Exchange Mechanism (ERM II) in the second half of the year.

The ministry forecasts a general government surplus of 0.2% of GDP in 2020, 0.4% in 2021 and 0.8% in 2022.

When it comes to the public debt, at the end of 2015 it amounted to 84.4% of GDP and at the end of 2019 it was reduced to 71.3% and by the end of 2020 it is expected to decline to 68%.

Favourable trends on the labour market are expected to continue and unemployment should continue to fall toward to 6.3% in 2022.

A set of legislative amendments entered into force on January 1 as part of the fourth round of tax reforms which among other things means that the non-taxable income threshold will be raised from 3,800 kuna to 4,000 kuna. Income taxes for young people under 25 years of age have been reduced by 100% while income taxes for those aged between 26 and 30 have been cut by 50%.

Economy, Entrepreneurship and Crafts Ministry plans to continue with reliefs for entrepreneurs and reducing or abolishing parafiscal levies.

An action plan is prepared to liberalise the services market by deregulating professions.

Amendments are expected to the legislation regulating working hours for stores to on Sunday, which are aimed at introducing non-working Sundays.

The ministry also plans to co-finance R&D projects for entrepreneurs through state subsidy schemes

Sea, Transport and Infrastructure Ministry underscores that 2020 will be marked with works to the railway network.

The current projects, which are underway, are estimated at 1.2 billion euro and during 2020 the Croatian Railways (HZ) passenger transport fleet will be upgraded with electric trains. These investments are set at 1.03 billion kuna. A project to improve the safety of railway/road level crossings is planned with the installation of equipment valued at 127.7 million kuna.

Several significant road construction projects have been announced including the construction of access roads to Pelješac Bridge with a total distance of 30.13 kilometres and valued HRK 990 million kuna as well as a new multimodal platform for the Split agglomeration including the towns of Solin, Stobreč, Dugi Rat and Omiš with a total investment value of 2.4 billion kuna.

Another significant project in road infrastructure is the completion of the first stage of the Istrian motorway with a tender for another tunnel through Učka Mountain.

Investments of more than 453.8 million kuna are planned for Croatian ports.

A national broadband aggregation infrastructure will be built with a value of 780 million kuna.

Croatia plans to determine its first 5G city and to adopt a national plan for the development of broadband access throughout the country for the period 2021-2027.

Environment and Energy Ministry says that 2020 will be marked with the preparation and adoption of a global and European strategy on biodiversity.

It expects to adopt the first national Strategy of adapting to climate change for the period until 2040 with a view to 2070 and it also plans to prepare a national action plan for the next five-year period that will contain priority measures in that regard.

More economy news can be found in the Business section.

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