Tuesday, 14 September 2021

IMF Predicts Croatian Economic Growth of 5.4 in 2021

September the 14th, 2021 - While the International Monetary Fund (IMF) predictions for Croatian economic growth in 2021 are optimistic, it's worth noting that Croatia had no only the coronavirus pandemic to deal with, but two devastating earthquakes, too. Both lead to a drop in economic activity of eight percent last year.

As Poslovni Dnevnik writes, the Croatian economy has been exposed to enormous levels of stress caused by numerous factors over the past eighteen or so months, but it is showing resilience and its strong recovery is predicted for both this and next year, with GDP growth of 5.4 and 5.8 percent, members of the IMF Mission said in a closing statement issued on Friday.

"For 2021 and 2022, a strong recovery is projected with Croatian economic growth of 5.4 and 5.8 percent, respectively, driven by the recovery in the services sector, assuming the realisation of two thirds of tourist arrivals from 2019 in 2021 and their almost full recovery in 2022, and investments that will be driven by large inflows of grants from the EU in the medium term. In the medium term, GDP growth is projected to slow down to around three percent,'' the IMF mission said in a statement at the end of their visit to Croatia which takes place as part of regular consultations held with member states under Article IV of the IMF statute.

The IMF recalls that the coronavirus pandemic and two devastating earthquakes led to a decline in economic activity of 8 percent in 2020 in Croatia due to reduced domestic and foreign demand, with a particularly large decline in tourism revenues, amounting to about 60 percent annually.

However, they also point out that generous support for fiscal and monetary policy, along with appropriate easing of supervisory requirements, has helped mitigate the effects of the coronavirus pandemic.

At the same time, they note, Croatia's financial position was somewhat eased by EU funds, which financed most fiscal support measures, and the CNB intervened in the foreign exchange market and eased tensions in the domestic bond market by buying government securities in the amount of approximately 5, 5 percent of GDP and lowered the reserve requirement and conducted repo operations.

Markets calmed down, especially after the establishment of a swap line with the European Central Bank (ECB) in mid-April 2020. They also referred to inflation, estimating that it is still low despite the recent increase, and they have also forecast its stabilisation at the level of 2 percent in the year 2023.

For more on Croatian economic growth, make sure to follow our dedicated business section.

Sunday, 5 September 2021

Vinkovci Employment Rate Encouraging, Potential for New Jobs High

September the 5th, 2021 - Vinkovci isn't a place that most people associate with economics in any way. Located in continental Croatia and further east than the City of Zagreb, many perhaps wrongly lump it in with other wrongly overlooked parts of the country which rarely get a mention in a positive economic light. That said, the Vinkovci employment rate is very encouraging, and entrepreneurs bringing job opportunities have their eye on the town.

As Novac writes, according to the Central Bureau of Statistics (CBS), Vinkovci is the only city in all of Eastern Croatia that is among the ten cities in the Republic of Croatia in terms of the number of employees per thousand inhabitants. Thanks to the support of the state and the City of Vinkovci, the number of entrepreneurs in Vinkovci is growing day by day, and there are no more places in the entrepreneurial zones - that's why new ones are being built.

In one Vinkovci plant, oak, walnut, ash and elm are cut, cut and dried, they make wooden products related to the serving of food for the hospitality and catering industry, said the owner Dragan Zaksek for HRT. The more unusual boards and trays are designed by Borna, who plans to work with his father after completing his high school education.

Vice Bozic successfully runs a digital marketing agency and is looking for new employees. He currently has three employees in his agency and their goal, he says, is to expand his business and work for companies from all over the world from Vinkovci.

The Vinkovci employment rate is encouraging, and there are eighteen enterprises looking for more labour in the now full business incubators, said manager Josip Cacic. They are even willing to co-finance the training of the workforce provided they commit to staying and working for them.

''We have a historically large number of employees, and this is perhaps a more important fact at this time. Throughout this pandemic, we felt almost nothing in terms of the number of employees, the gross salary grew by over 1000 kuna and there have been over 1000 new employees,'' stated the mayor of Vinkovci, Ivan Bosancic, of the impressive Vinkovci employment rate.

Vinkovci also provides subsidies to entrepreneurs and their companies, and they then provide higher salaries to their workers. Both entrepreneurial zones have been filled up, and they're now planning to bring foreign investors into the new one they're building and thus create even more new jobs.

For more, make sure to check out our dedicated business section.

Saturday, 4 September 2021

1100 Croatian Hospitality and Catering Establishments Stopped Working This Season

September the 4th, 2021 - While it's true that many individual Croatian hospitality and catering establishments such as coffee bars and other cafes finally did well and managed to make some decent money this season, as many as 1100 of them were forced to stop working.

As Novac/Jozo Vrdoljak writes, after many Croatian hospitality and catering establishments were forced to shut their doors on November the 30th last year, a breath of fresh air came in the form of the news that as of September the 1st, with special epidemiological measures, they were able to receive guests again in the closed-off parts of their facilities.

The opening hours of bars and discos remained until midnight, and the direct consequence of the closure of Croatian hospitality and catering establishments with great difficulties and a drop in traffic, is most evident through the number of 1100 permanently closed establishments. It is assumed that these are mainly trade owners who closed their facilities for fear of foreclosure on their properties.

The decision to open up Croatian hospitality and catering establishments surprised many people, but it was certainly welcomed by their owners. However, measures and grants have been being negotiated and looked at again over recent days, with many people needing to wave goodbye to government help.

Bars on the Adriatic coast worked the season with a drop in traffic of 10 percent, and those on the continent with a drop of 23 percent. The realised amounts during the season in restaurants in the amount of two thirds fall on those down on the Adriatic, while in bars this ratio is three quarters in favour of those on the Adriatic.

When you look at the drop in traffic from February to May - it was 38 percent for restaurants and 62 percent for bars. According to the currently available data, there are about 35,000 Croatian hospitality and catering establishments across the country, of which about 55 percent are just bars. It has been estimated that about 7,000 such establishments don't have a terrace at all, so they couldn't operate.

Support in the amount of 4,000 kuna per employee is given to Croatian hospitality and catering establishment owners who had experienced a drop in turnover of over 60 percent, those who had a drop in the amount of 50 percent who received support in the amount of 3,000 kuna, while those with a drop in turnover of 40 percent received 2,000 kuna. Having 70 percent of their employees vaccinated against COVID-19 was also a condition.

Jelena Tabak, president of the National Association of Caterers, noted that the season will mean little to nothing if Croatian hospitality and catering establishment owners aren't allowed to work until the very end and without any restrictions.

''Even though they can work now, not all establishments will just open and start working normally straight away. It's impossible to just start to work at full capacity after not working for nine months. On that note, it would be proper for the state subsidies to remain in place in the hospitality sector as well, because our sector has been seriously affected by the coronavirus crisis. In addition, people's habits have changed and now a large number of people are actively avoiding being in enclosed spaces.

As such, there are still serious limitations to the operation of Croatian hospitality and catering establishments. For example, four square metres per guest limits the work of these places quite a lot. Some of them, however, still managed to do great job this season, but there are a large number who didn't,'' explained Jelena Tabak, who admitted that the general situation is still much better in Croatia than in some other countries.

Tabak explained that the financial growth of the income of Croatian hospitality and catering establishments is partly due to a significant rise in prices.

"It's true that some establishments have done very well this season, but cumulatively the hospitality sector is recording a serious drop in turnover. The fact is that our colleagues on the continent are in a very difficult situation, and now comes the period when even those on the Adriatic will have reduced income. What follows now is a period in which we won't have a significant number of tourists, but we'll still generate some income thanks to Croatian guests.

The problem is also that Croatian hospitality and catering establishments can’t organise parties, so they can’t create an atmosphere that will attract guests. Hospitality rests on social interaction. A restaurant does well if it creates an atmosphere and attracts guests, and owners have been deprived of that due to the measures,'' explained Tabak.

For more, make sure to check out our dedicated business section.

Saturday, 4 September 2021

OVI Index Provides Strong Signals of Croatian Economic Revival

September the 4th, 2021 - The coronavirus pandemic hit the Croatian economy, which relies very heavily on tourism, like a tonne of bricks. While things have been far from easy over the last eighteen or so months, the OVI Index (Online Vacancy Index) provides strong hope for Croatian economic revival.

As Poslovni Dnevnik/Marija Crnjak writes, demand for labour in the Republic of Croatia exceeded the levels of 2020 and 2019 according to the OVI index, which, for the month of August 2021, shows that the demand for labour in the country is 60 percent higher than it was back in August 2020, and about 20 percent higher than in pre-pandemic August 2019.

The Institute of Economics announced the above, noting that the latest values ​​of the OVI Index are in line with other positive economic indicators that have come to the attention of the general public over recent weeks. Croatian economic revival has undoubtedly been helped enormously by a remarkably good summer tourist season, which just keeps on going.

The Online Vacancy Index (OVI) is a monthly index of online job vacancies developed at the Institute of Economics in cooperation with the popular Croatian MojPosao (MyJob) portal, and is created by simply counting the number of unique new ads whose application deadlines end within the month for which the index is calculated.

"When comparing the level of demand for labour this year and that of 2019, this is the fourth consecutive month in which the demand for labour has exceeded the pre-pandemic months, which is a strong signal of Croatian economic revival and the recovery of the labour market. Demand for work in the three traditionally most sought-after occupations - salesman, waiter and chef - is also growing compared to August 2019 and 2020, and driver and construction workers stand out from the more sought-after occupations.

It is also interesting to note that since the beginning of the coronavirus pandemic, the share of job advertisements that mention work from home ranges to approximately 1.5 to 2 percent of all advertisements, which is an increase when compared to the period before the pandemic when work from home was mentioned in less than 0.25 percent of job advertisements,'' stated EIZ analysts.

For more, make sure to check out our dedicated business section.

Wednesday, 1 September 2021

Tourism Pushes Croatian Retail Sector Forward, Analysts Optimistic

September the 1st, 2021 - The excellent tourist season which appears to just keep on going has pushed the Croatian retail sector out of the slump the global coronavirus pandemic had forced it into. Analysts are, unsurprisingly, very optimistic as a result.

As Poslovni Dnevnik/Ana Blaskovic writes, after a record jump in GDP in the second quarter of 2021, the indicators for the beginning of the third quarter, the most generous part of the year for the economy, also look fairly positive. In July, retail spending rose 12.8 percent for the sixth month in a row, reflecting a good tourist season and good economic recovery.

Turnover in the Croatian retail sector (referring to trade, and calendar adjusted) during the month of July increased by 2.2 percent in real terms compared to the previous month. Half a year of consumption growth comes after the previous 11 months of decline, or 5.8 percent of the deficit in 2020.

Retail trade in food, beverages and tobacco products rose 12.8 percent in July, and the non-food segment (excluding fuels and lubricants) 9.1 percent year-on-year, the Central Bureau of Statistics (CBS) calculated.

Raiffeisen Bank analysts point to the fact that last year, with which the trends are being compared and measured, the decline was large.

"Apart from the effect of the base period, the continuation of favourable trends is also the result of the good trends in tourism, moderately positive trends on the labour market, as indicated by data on consumer optimism, which, despite a slight deterioration when compared to June, continued to grow annually," they said.

The passage of time certainly provides for a decent dose of optimism for the performance of the economy in 2021 as Croatian GDP rose 16.1 percent in the second quarter, and perhaps more importantly, it was the first jump after four quarters of worrisome decline.

The Tax Administration's data on fiscalised receipts issued from the Croatian retail sector also show continued double-digit annual growth rates exceeding pre-covid levels, the RBA said, underscoring the good labour market situation and strong spending in tourism.

This continued growth, however, will depend on the development of the ongoing epidemiological situation, which is unfortunately deteriorating with warnings from the profession that we are entering the fourth wave with only 39.4 percent of the Croatian population having been fully vaccinated.

For more, follow our business section.

Sunday, 29 August 2021

Minister Aladrovic Reveals Who Will Continue to Receive Economic Support

August the 29th, 2021 - Labour Minister Josip Aladrovic has revealed who the Croatian economic support created by the government as a result of the pandemic will continue to go to, and who it no longer will. Minister Aladrovic also announced a rise in both wages and pensions.

As Poslovni Dnevnik writes, economic aid for Croatian companies will remain in place only for those who continue to be the most vulnerable to the pandemic and to any introduced anti-epidemic measures, announced Minister Aladrovic. He stated that because of the easing of the country's epidemiological measures, he sees no reason to continue to stimulate individual employers.

Minister Aladrovic also stated that aid will continue to be paid out to the organisers of sport and cultural events, the event industry, and perhaps the hardest hit of all - travel agencies.

"So, this will keep being paid out to a relatively small segment of our society, but to those who are most exposed," said Minister Aladrovic as a guest on Dnevnik Nova TV, adding:

"If there are economic disruptions again, which we hope won't occur, we're still ready to help those to whom the disruption occurs," he said, calling once again for people to get vaccinated as the best way to preserve both public health and the domestic economy.

As for the much talked about reforms, Minister Aladrovic said that they have been implemented and that he will continue to implement them, but he didn't give a concrete answer as to when concrete reforms in the healthcare system, public administration, or the judiciary will start. He pointed out that the coronavirus pandemic has slowed down certain reforms, but he remains confident that the Government will implement them by the end of its term.

He added that it is difficult to assess whether rising prices will push certain vulnerable individuals even further into poverty.

"What is good, is that salaries are rising," said Minister Aladrovic, adding that pensions are also rising. The average pensioner will receive about 60 kuna more per month, and Aladrovic says that it is equal to almost a billion kuna annually for the state budget.

He didn't bother to properly answer the question as to whether or not it is fair for the average pension to increase by around 60 kuna, and for members of parliament to have theirs increased by as much as 230 kuna. Aladrovic briefly stated that "harmonisation takes place in accordance with the legislative framework".

''Aware of the inadequacy of certain types of pensions, we've decided on a new way of calculating family pensions that are the least adequate and we'll do all that in the next step. The lowest pensions have been increased by more than 20 percent. I'm sure that movements within the pension system will also prevent any increase in poverty,'' said Minister Aladrovic.

Speaking about the Labour Law, Minister Aladrovic said that two things are changing, the relationship between fixed-term contracts and indefinite contracts.

''We want to reduce the number of fixed-term contracts and allow those who want to work more to be able to do that,'' he said.

For more, follow our politics section.

Sunday, 29 August 2021

Unexpected Record Croatian GDP Jump in Second Quarter of 2021

August the 29th, 2021 - There has been a record and entirely unexpected (when looking at previous predictions from various sources) Croatian GDP jump in the second quarter of 2021, some are even daring to say that the Republic of Croatia is ''out of the recession'' the global coronavirus pandemic forced it into.

As Poslovni Dnevnik/Ana Blaskovic writes, the Croatian economy grew 16.1 percent year-on-year in the second quarter of 2021, the Central Bureau of Statistics (CBS) said.

Although the CBS points out that this is the first growth after four quarters of decline, it is also the largest since 2016, and it should be taken into account that the performance of the economy is compared with the same period last year during which the spring ''lockdown'' continued for some time. It's also worth noting that the fall in Croatian GDP reached a record 14.4 percent, which illustrates the scale of the low base effect.

While according to seasonally adjusted data, the Croatian economy recorded annual growth in the second quarter, the quarterly Croatian GDP was down by 0.2 percent.

Croatian GDP growth in the second quarter of 2021 is the first after four quarters of continuous decline due to the global coronavirus pandemic and its aftermath. At the level of the whole of 2020, the economy fell by 8 percent, which is one of the biggest minuses in the entire European Union (EU).

The growth of the economy in the period from April to the end of June is a consequence of the increases across all components of Croatian GDP, with personal consumption/spending expected to be the highest.

Household consumption grew 14 percent when compared to a 0.3 percent minus in the previous quarter. Exports of goods and services jumped 40.9 percent year-on-year; with exports of goods up by 35.2 percent and services up by 56.3 percent on the wings of a good preseason.

The imports of goods and services also jumped by 30.3 percent. The imports of goods rose 30.5 percent and services rose by 28.9 percent. Of the other components that make up the Croatian GDP, gross fixed capital formation rose 18.3 percent year-on-year and government spending rose by 4 percent.

For more, follow our business section.

Wednesday, 11 August 2021

Increasing Number of Italian Companies Want to Move Production to Croatia

August the 11th, 2021 - An increasing number of Italy-headquartered companies want to start moving the production part of their business to the Republic of Croatia. Could this bring even closer economic ties between Italian companies and those from here in Croatia? It's likely.

As Poslovni Dnevnik/Marija Brnic writes, for the third month in a row now, Italy has been very firmly in the position of the leading Croatian export market. Last year, during the country's lockdown in the face of the global coronavirus pandemic which was declared by Italy significantly earlier than other European countries, exports to that country dropped drastically, and the traditional status of the main destination for Croatian products was taken over by Germany.

In the first five months of 2021, Croatian exports have been growing well on both markets, but they're still stronger in Italy, and, as data from the Central Bureau of Statistics shows, the recovery so far brings with it a far better export result than back during the same period in 2019.

In the first five months of this year, a total of 899 million euros worth of goods were placed in neighbouring Italy, which is seven million euros more than in pre-pandemic 2019, and compared to the first five months of 2020, it is a jump of as much as 235 million euros.

In addition to exports, imports from Italy are also growing significantly, although they're still behind the values ​​achieved in the first five months of 2019. It amounts to 1.32 billion euros and is lower by about 300 million euros.

"Our predictions were that we'd have the beginning of a recovery in bilateral relations, but the figures recorded and the dynamics in the first part of the year exceeded all of our expectations," said Andrea Perkov, Secretary General of the Italian-Croatian Chamber of Commerce. The real expansion in the already close economic relations of these two neighbouring countries, she claims, is very much expected.

"Last year's crisis gave rise to a change in business orientation among Italian companies, which has been present for a long time to some degree or another, and that is the transfer of business and production to other markets, even distant ones. With the coronavirus pandemic taking precedent, this tendency was interrupted, and in the first part of the year we recorded a huge increase in interest from Italian companies in relocating their production and expanding their business right here in Croatia,'' said Perkov.

Those more distant destinations in which Italian companies operated were mainly China and North African countries, when it comes to countries outside the EU, Serbia, and within the EU, Bulgaria and Romania were in the lead. Now, between 60 and 70 Italian companies have already expressed interest in investing in Croatia, with most inquiries coming for infrastructure and food production.

The locations that are being looked into are mostly in Istria, which doesn't come as a surprise as many prefer bilingualism as well as good infrastructure and traffic connections, but Perkov points out that he is also interested in the Split-Dalmatia and Medjimurje counties.

With the representatives of Italian companies at the level of the Italian system that connects the chambers, (the Italian Trade Institute and the Embassy in Croatia), numerous meetings and communication about possible investments have been being organised, and Perkov sees special merit in establishing stronger bilateral relations in the commitment of Italian Ambassador to Croatia Pierfrancesco Sacco who took office last year.

The Croatian NPOO, the text of which has already been translated into Italian, is expected to give additional impetus to a stronger connection between Italian companies and Croatia. As far as investment is concerned, the cost is not a problem for Italian companies, but, according to the Italian-Croatian Chamber of Commerce, concerns about Croatia's infamous slow administration and legal uncertainty prevail.

As the pandemic-induced shock has "reset" everything on a global scale, Italians are now much more inclined to do business in their closer neighbourhood, with one sector recording intensive cooperation and networking, as well as mutual investment. IT, a blossoming sector in Croatia, will dictate more or less the entire pace.

As far as exports are concerned, it isn't yet possible to determine from official statistics whether any of the products particularly bounced off the market during the first part of this year and pushed the overall result, but in recent years the structure of Croatian exports has been dominated by wood, metal and textile and the food industry.

With the implementation of the projects currently being prepared, Andrea Perkov is convinced that further strong growth in exports and total trade between Croatia and Italy can be expected with a decent dose of healthy optimism.

In addition to Italy and Italian companies, an increase in exports is being steadily recorded in most major markets, and the only significant drop in statistics is shown in relations with Luxembourg, where last year, the value of exports exceeded 122 million euros in five months, and this year it stands at a mere 5 million euros.

That being said, exports to Luxembourg tend to fluctuate strongly and vary due to dependence on shipbuilding exports anyway, which are lacking this year.

It can also be said that the case of Italy reflects the overall result of Croatian exports, which achieved a record result of a total of 7.11 billion euros on a five-month level, which greatly exceeds the previous highest level from pre-crisis 2019, by as much as 895 million euros in total.

The result will be even higher at the level of six months, as preliminary CBS data shows that exports in the first half reached 8.72 billion euros, which is almost 1.34 billion euros more than in the first half of the record, pre-pandemic 2019.

For more, follow our business section.

Monday, 9 August 2021

Croatian Spending Increases, 113 Billion Kuna More Spent Than in 2019

August the 9th, 2021 - Croatian spending increases signal the long awaited recovery process for the domestic economy, with as much as 113 billion kuna more spent so far in 2021 than back during pre-pandemic, record 2019!

As Morski writes, the Croatian spending increase is seeing much more spent than was spent back in 2019, with consumption records being set. For the first time, Croats spent the most in July, and not during August as was typically the case before. As of today, Croats have spent 113 billion kuna more than they did back in 2019.

The fact that the sale of luxury cars is progressing like never before speaks for itself and it's almost as if there had never been an unprecedented global public health crisis. That isn't all, brand new apartments are being reserved and snapped up before the builders even arrive at the construction sites.

It didn’t take long for Croats to forget about the pandemic-induced economic crisis that rocked the world last year and current Croatian spending habits are well and truly reflecting that stance.

On July the 30th, 2021, the Croatian spending/consumption record was broken. Receipts and bills worth a massive 926 million kuna in total were issued, which is the highest in terms of Croatian spending in one day since the introduction of fiscalisation in the country.

During the pandemic which dominated 2020, Croatian residents sat at home and saved more than 15 billion kuna, which they're now out spending, economists point out.

''In a way, they were waiting for the uncertainty surrounding the public health crisis to pass so that they could start spending their cash. The recovery of consumption and its significant growth has a positive effect on the situation in the state budget, given the VAT revenues, which are its most important item,'' explained economist Iva Tomic.

In the first half of this year, almost 6,000 more cars were purchased than at the same time last year, and the most luxurious ones are doing especially well - for example, twice as many Porsches were sold.

Apartments were also sought, and a brand new residential complex will be built on the site of some dilapidated barracks in the very centre of Zagreb. Although the construction has not even started, the apartments are already being purchased, despite the high price of up to 4,000 euros per square metre. It has been said that this real case of consumer fever after a pandemic-dominated year hasn't come as much of a surprise to psychologists.

For more, follow our lifestyle section.

Wednesday, 4 August 2021

Zagreb County Employment Rate Rises by 3.3 Percent

August the 4th, 2021 - The ongoing coronavirus pandemic has threatened jobs like never before, with countries which rely very heavily on tourism suffering unimaginable uncertainty. Croatia is one of them. Things are slowly recovering however, and the Zagreb County employment rate has risen.

Economic issues in Croatia weren't ''born'' when the pandemic struck the globe, but they were certainly made exponentially worse with intermittent lockdowns and issues with transport, travel and tourism. While the Zagreb County employment rate perhaps isn't the one you'd expect to see much growth in comparison to the coast, things are looking up.

As Poslovni Dnevnik writes, with the highest total revenue of 6.1 billion kuna in 2020 and the largest number of employees - 2,377, Lidl Hrvatska (Croatia) from Velika Gorica neat the City of Zagreb maintained its dominant role among leading companies based in Zagreb County.

The largest exporter was the company Hospira Zagreb from Prigorje Brdovecki (809.5 million kuna), according to Fina, which, for the pandemic-dominated year of 2020, shows a good picture of Zagreb County's economy in which 9258 enterprises had their headquarters last year. With its 63,044 employees, there is a 3.3 percent increase in Zagreb County employment levels.

The average monthly net salary for Zagreb County employees amounted to 6,144 kuna, which is 2.7 percent higher than it was back in 2019 and 2.9 percent higher than the average for that category at the Croatian level.

According to the processed AFS for 2020, companies operating in this continental Croatian county achieved 56.9 billion kuna of total revenues (0.1 percent more than back in 2019).

Compared to other counties, Zagreb County is highly ranked according to a number of indicators: it is in fifth place according to the number of companies headquartered there, third according to the number of employees, second according to total revenues and realised net profit, and number one according to the indicator of labour productivity measured by net profit and the number of employees, making it the country's best in that regard at the moment.

For more, follow our lifestyle section.

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