Friday, 29 October 2021

Croatian Employers Would Implement Covid Certificate Introduction But Can't

October the 29th, 2021 - Croatian employers would gladly introduce covid certification presentation as a mandatory move but cannot under current Croatian law. As a result, they're seeking two important things from the state.

As Poslovni Dnevnik/Marija Crnjak writes, many Croatian employers claim they're overwhelmed and irritated waiting around for the state to finally define the rules around covid certificates, which they would like to introduce them at workplaces and thus join the health and social care system which already have the same rule, but Croatian employers cannot do that because they have no legal basis to introduce it.

The Croatian Employers' Association (HUP) has therefore asked the relevant ministries to issue instructions to employers, which would answer numerous inquiries and concerns about covid certificates owned by their workers, and provide some clear guidelines on how to organise further business given the negative epidemiological situation and the number of workers who are unwell and in self-isolation. They are also asking the state to cover the costs of testing for the novel virus.

Despite the recommendations of the Croatian Institute of Public Health (CNIPH), Croatian employers currently have no legal basis to ask their employees to present a covid certificate, nor to remove them from the workplace if he doesn't produce one,'' they explained from HUP.

Namely, Resolution 2361 (2021) is in force across EU member states, which stipulates that people must be informed that vaccination against the novel coronavirus isn't mandatory, and that there's no political or any other pressure or discrimination to be placed on those who don't want to receive the vaccine. In addition, as the vaccine against coronavirus is not on the list of mandatory vaccines for the Republic of Croatia, there are no obligations or sanctions for refusing vaccination.

Croatian employers are obliged, according to the recommendations of the CNIPH, to finance all the testing of their workers, if necessary. The state pays this only to the health and social care sectors, which HUP considers to be discrimination. HUP therefore sent a request to the competent institutions asking for coronavirus tests be provided to all Croatian employers in an equal way.

"We believe that it's inconceivable and unfair to all other companies to make some sort of difference based on the protection of the health of employees by sector, and by belonging to the public or private sector. All of the above leads to legal uncertainty, and consequently the inability to organise business in a healthy working atmosphere. This situation requires urgent action by state institutions in the form of issuing clear guidelines to employers that would ensure the protection of their workers and the legal operations of Croatian employers during the pandemic,'' they concluded from HUP.

At the time of writing this article, they hadn't yet received answers from the authorities.

For all you need to know about coronavirus specific to Croatia, bookmark our dedicated section and select your preferred language.

Friday, 29 October 2021

McKinsey: 140,000 Croatian Workers Will Need to Change Occupations

October the 29th, 2021 - A huge amount of Croatian workers will need to consider changing their occupations as digitalisation and automation continues to leave the need for the human touch in the past, according to a recent analysis.

As Poslovni Dnevnik writes, approximately 340,000 jobs will disappear due to automation and trends fueled by the COVID-19 pandemic, but rest assured, these will be replaced by almost the same number of new jobs in new occupations and growing industries and due to a general increase in productivity. While net labour demand will remain virtually unchanged, there will be significant changes in the structure of occupations on offer. Therefore, by the end of the decade, almost 140,000 Croatian workers will need to change their occupations in order to remain employed.

This is one of the conclusions of the analysis published by McKinsey & Company Adriatic in cooperation with McKinsey Global Institute entitled The Future of Work in Croatia - Transformation of the Croatian Workforce in the Age of Automation and Digitalisation, which examines the impact of automation, artificial intelligence and digital technologies on various sectors, occupations and jobs, and the combined impact of all this on the combination of skills that the Croatian workforce will need to have by 2030.

Realising the full economic potential of automation and digitalisation, but also maintaining the existing level of employment will require the cooperation of all stakeholders to find ways to enable Croatian workers to transform and acquire the skills that will be required in the future.

"This isn't just going to happen by itself - all private organisations, public institutions and educational institutions will have to work together during the transition period to realise this potential," said Tomislav Brezinscak, CEO of McKinsey & Company Adriatic.

By 2030, six percent of the total number of working hours in Croatia will move from jobs that require physical skills to solve work tasks to jobs that require cognitive, social, emotional and technological skills. Specific skills, such as those needed to manage devices and equipment and to easily enter and process data, are likely to experience the largest drop in demand in the share of employees by 2030. This is to be expected, as activities that require physical strength and skill as well as data collection and processing skills are something that can be very easily automated now.

The analyses described in this report take into account the composition of the workforce throughout the country, combined with the expected rate of the adoption of automation, based on available technologies and the economic feasibility of their implementation. When looking at the potential speed of automation from the perspective of trends fueled by the coronavirus pandemic, Croatia will achieve an automation adoption rate of around 22 percent by 2030.

In other words, the activities that currently account for about 22 percent of the total number of working hours of employees in Croatia will be automated by the end of the decade. The adoption of automation will vary from sector to sector - manufacturing, wholesale, business functions that serve to support the administration, and public administration - will be the areas with the highest rate of automation adoption.

Croatia needs to improve its productivity in order to achieve sustainable economic growth and income growth in all segments of the population. This is especially important because the population of Croatia is only getting older. Automation is also an opportunity to realise Croatian national interests. Companies, if supported by the appropriate policies and investment in skills development, can develop new services and products, increase their productivity and create new and better paid jobs. By embracing the changes that will take place in the world of work over the current decade, Croatia can avoid structural unemployment and create new national wealth in a way that promotes social inclusion.

Accelerated digitisation may be the most important new driver of growth, and Croatia's digital economy, which encompasses all digital activities in all economic sectors, now accounts for approximately five percent of GDP, equivalent to 2.4 billion euros. By 2025, the digital economy in Croatia can reach 11 percent of GDP, which means that it will contribute to the value of the overall economy with 8.3 billion euros.

Although automation and digitalisation provide an opportunity to create a more productive and competitive Croatian workforce, they also bring several challenges - especially in terms of losing existing jobs and developing future skills. Like stakeholders in other EU countries, all stakeholders in Croatia must balance the pace of automation and the acquisition of new skills if they want the country to benefit from automation and the introduction of new technologies.

If automation and digitisation happen too quickly, it may happen that the new jobs that will be created will remain unfilled by Croatian workers, and that, potentially, could lead to worsening income inequality. On the other hand, if automation and digitalisation happen too slowly, it could harm Croatia's competitiveness and prevent economic growth.

For more, check out our business section.

Wednesday, 27 October 2021

Finance Minister Maric: Croatia to Reach Pre-Recession Levels in 2 Years

October the 27th, 2021 - Finance Minister Maric has been discussing the completion of the rebalance of the state budget for 2022, and has stated that all of the processes and procedures which need to be done have been passed, as reported by N1.

As Poslovni Dnevnik writes, Finance Minister Maric stated that the rebalance and domestic economic growth is higher than expected, that he and his team are busy finalising the macroeconomic projections and that they're going over 8 percent, which is a very good result and we can be satisfied with it.

''The Republic of Croatia will reach pre-recession levels of GDP in two years, which is a fantastic result. That rate had its repercussions, revenues will be slightly adjusted for the better, but that said, we also have not the best news, as the expenditure side of the budget is growing slightly more than the revenue.

We had a slightly higher indexation of pensions, primarily due to inflation, but as a government, we're glad that pensions are rising. We also have a situation with measures to preserve jobs, they were envisaged only for the first couple of months, but for some sectors they're still valid. As for salaries, we knew from the beginning that we had insufficient funds, but now we're securing them. At the level of the general government, the deficit is slightly higher,'' explained Finance Minister Maric.

On the debt to wholesalers, he said that healthcare is in the first budget, so now, given the situation with coronavirus, this enfeebled sector inevitably needs a quality reform on the expenditure side.

''Revenues provide their contribution, and this year, we'll allocate over 9 billion kuna to keep the payment deadlines at 180 days for hospitals and 120 days for pharmacies. If we look at wholesalers, at the moment, with a small deviation, the debt of hospitals stands at 2.8 billion kuna, and pharmacies some 400 million kuna. To compare, over 9 billion has been paid off so far and will be paid by the end of the year to meet those deadlines. That's when we'll need to come to increasing expenditures,'' he added.

When asked how much the rebalance for the healthcare system will amount to, Maric said quite frankly - one billion and six million kuna.

"You'll get to hear about the deficit on Thursday, and then we'll have to dose it a little, it will certainly be over 4 percent but it won't reach some unsustainable level," he said.

“It brings us back to the trajectory we had before the pandemic. We had a continuous reduction of public debt for four years, then we had a jump due to coronavirus, and this year alone we've been returning to the path of reducing public debt,'' he said.

''l’ll finish up with a bit of good news - public debt will decline at the end of the year. It's something we want to emphasise, it's a clear message to everyone, you know yourself, fiscal policy has been put into the function of preserving health and life and jobs from day one,'' said Finance Minister Maric.

''The inflation projection is still below 3 per ent. Despite the acceleration, it's stayed at that level, but we're still taking it very seriously, not only because of the Maastricht criteria, but also because of people,'' concluded the Minister of Finance.

For more, check out our politics section.

Wednesday, 27 October 2021

Croatian Unemployment Rate Falls, Fixed-Term Contracts Dominate

October the 27th, 2021 - The Croatian unemployment rate is continuing to fall, particularly and apparently encouragingly among the youth. Fixed-term contracts currently dominate.

As Poslovni Dnevnik/Jadranka Dozan writes, as of yesterday, there were 123,000 unemployed people regisered at the Croatian Employment Service (CES). When compared to the end of last month, this represents an increase of 3910 people, but on an annual basis, this number still indicates a decrease in the number of unemployed people in the country - compared to the end of last October, there are 21,000 fewer of them.

According to the latest monthly report, for September, the annual Croatian unemployment rate was almost a fifth (19 percent) or 28,340 lower. In year-on-year comparisons, the number of unemployed people in the age group of 20 to 24 decreased the most, by almost 30 percent, which brought its share in the total number of unemployed people in the country below ten percent.

There are more and more job ads...

The overall better picture of the domestic labour market compared to last year is evidenced, among other things, by the fact that as many as 44 percent more vacancies were registered in September this year (23.5 compared to 16.3 thousand).

Relatively speaking, the largest increase was recorded in Istria County, where the number of workers needed was twice as high as it was last September, in Split-Dalmatia County, 80 percent more employees were sought, Zagreb also recorded 73 percent more September searches for workers. More than 700 workers were sought for work abroad, which is 37 percent more than in the same month last year.

At the same time, slightly more than 21,400 people de-registered as unemployed last month (12 percent less than last September).

In 16,800 of them, the reason was the fact that they had found work, but more than 900 people ceased to have this status due to other forms of business activities, such as people who had started their own business (by registering a trade or company).

Of those who found employment, almost nine out of ten cases were fixed-term contracts, and almost half of new employees found work in education. Of the total number of those who found a job last month, 6,300 of them are from the group of people who have a higher education.

At the same time, more than 4,600 people were deleted from the unemployment register for other reasons, and in addition to leaving the world of work due to retirement or inclusion in regular schooling, about 1,500 people were ''deleted'' from the list due to non-compliance with legal provisions.

In more than half of the people in this group, the reason is that they aren't actively looking for a job. For 75 of them, the reason is refusing to look for or accept a job, and a further ten have refused to enroll in some form of education. Of the total number of unemployed people, the share of those who receive CES cash benefits has actually been declining for years. Currently, the benefit is received by a little more than 25 thousand people, or just a little more than every fifth unemployed person.

In the structure of those who are unemployed according to the level of education, it is noticeable that the share of highly educated people has been slightly growing this year as well, although at the end of September this year there were nominally 24,000 or almost 500 less such people in this situation than there were last year.

For more on the Croatian unemployment rate, the economy and working in Croatia, make sure to check out our business section.

Saturday, 23 October 2021

Finance Minister Zdravko Maric Talks Rebalances, Projections, Eurozone

October the 23rd, 2021 - Finance Minister Zdravko Maric has spoken out about rebalances, projections for the future, stability and of course, the topic on the lips of most - Croatian Eurozone entry, which is edging ever closer.

As Poslovni Dnevnik/Ana Blaskovic writes, at the end of this year or at the very beginning of 2022, the situation in the Republic of Croatia should return to pre-crisis levels. This is of course good news for the domestic economy with the perspective of Eurozone entry in 2023, but this generally optimistic picture is still being threatened by numerous risks, from poor vaccination levels to so-called ''bubbles'' on the Croatian real estate market. These matters could be heard being discussed at the conference of the Zagreb Stock Exchange and pension funds entitled "The Challenge of Change/Izazov promjene".

Finance Minister Zdravko Maric announced that he would step out next week with a rebalance and a few new projections.

"At the end of this year, or at the beginning of next year, we should reach pre-pandemic figures," he assured. The Croatian Government will also refresh its fiscal expectations for the next three years, which will be marked by the implementation of the National Recovery and Resilience Plan, the effects of which should boost GDP by 1.5 percentage points on average.

818 million euros have been pumped into Croatia so far, and the new cash injections will depend on the fulfillment of 34 different criteria by the end of the year. If they're met, the government will submit a report to the European Commission (EC) in January or February, and then "we can expect a new payment in May or June."

In terms of Eurozone accession, Finance Minister Zdravko Maric says, everything is currently going according to plan. Interest rates and the exchange rate aren't in question, but inflation is a new fear. "Inflation is a priority for us because of society, the economy and of course because of people, but we should also look at it through Maastricht, even though Croatia is at the EU average. According to these projections, we should satisfy that as well. The real date of joining the Eurozone is 2023, I see no reason as to why we won't manage to meet the criteria,'' said Maric.

The introduction of the euro as Croatia's official currency could reduce the risk premium by two levels and thus partially amortise the possible growth of interest rates, which has been a current topic lately.

Croatian National Bank (CNB) Governor Boris Vujcic, on the other hand, expects a quick recovery "in the shape of the letter V", for 2021 in the form of GDP growth of 8.5 percent, and then of 4.1 percent. He noted that inflation is a consequence of supply disruptions, making it somewhat difficult for ordinary monetary tools to address it.

"Raising the reference interest rates over the next two years isn't going to significantly affect the price of oil and gas, which make up half of inflation," said Vujcic. He underlined that the current figures (3.5 percent in September, op.a.) are historically low, but that we have become accustomed to a long period of low inflation, which has in fact been too low.

"This year we expect an inflation rate of 2.3 percent, which isn't worrying, it's actually very close to the goal of monetary policy and it will calm down slightly next year,'' he assured.

Risks in the macro environment...

In addition to energy, the CNB sees numerous risks in the macro environment in the form of the slower cleaning of the market from bad companies and the creation of a real estate bubble, among other things. Prices are also being pushed by foreigners buying properties, especially on the coast.

“The availability of property has started to deteriorate, loan installments in relation to disposable income are slowly growing. "If this trend continues, property purchasing becomes inaccessible to a part of the population with lower incomes, and this should be kept in mind because it's now also becoming a political problem," the governor warned.

Assessing the risks to financial stability, Hanfa's Ante Zigman briefly summed it up by saying that "it isn't exactly great, but it isn't terrible either".

“We’re not too worried about it all, but we’re on guard,” he said. In the second quarter, the risks were somewhat reduced, and for the third, in which inflation returned to the scene, there is no data to be looked into yet. There are a range of risks present; from investment concentration, labour market issues to, once again, the issue of real estate.

"Currently, there are high risks of valuation, the question is whether or not we have an overheated market. The risk of things falling due to high valuations is very possible ", warned the head of Hanfa. Labour Minister Josip Aladrovic out that there is reason for optimism at the end of the global coronavirus pandemic.

"We've never had closer cooperation between politics and economics. The government acted in a timely and adequate manner, we can say that we saved the economy. We're now going into the job creation phase,'' he said, announcing that a very important role is played by pension funds that manage 130 billion kuna.

“They need to invest in long-term sustainable investments, which will create pensions and increase them in the future. It's up to us to redefine the regulations in the direction of the diversification of investments and goals, which we'll do in the short term and in cooperation with those pension funds,'' he concluded.

For more, follow our politics section.

Wednesday, 13 October 2021

Croatian Employers' Seek Staff, Blocked Investments Hope for Green Light

October the 13th, 2021 - Croatian employers, especially those in the tourism and construction industries, are so desperate for qualified staff that the issue is becoming more of a problem than the pandemic was.

As Poslovni Dnevnik/Marija Crnjak writes, although last year they barely made up 40 percent of 2019's revenue, thanks to state measures, moratoriums on loans and previous stocks, the leading large tourism companies managed to maintain the stability they needed to realise the remarkably successful 2021 season.

The biggest problem this year has been the lack of manpower, which has spread from uncertainty in the travel industry to other sectors, primarily the construction industry. When the results add up after the season, which continued at a more than decent pace throughout the month of September, decisions will be made to restart investments that were blocked by the pandemic.

Both ''pandemic years'' have shown that the best result was achieved by the premium segment of the offer, and there are many places to invest in all segments of accommodation, from campsites and hotels to family/private accommodation and entertainment.

Maistra, including Dubrovnik's Hilton Imperial, recorded 45 percent of the sales it had in pre-pandemic 2019 during a very difficult 2020, realising at the same time 41 percent of their sales of goods and services from 2019. Segment analysis showed that in 2020, campsites performed 9 percent better in terms of the number of units sold than the Maistra average. In the period from June to September, when the business was without significant epidemiological restrictions, the best sales compared to the previous year (2019) were achieved by the luxury hotel segment in the Istrian city of Rovinj.

In 2020, HUP-Zagreb generated only 18 percent of units sold and 18 percent of the sales revenue compared to the previous year of 2019, which is devastating. Maistra's consolidated revenue from the sale of the tourism segment in 2020 amounted to 587 million kuna, which is a mere 35 percent of the 2019's impressive realisation.

Profit before interest, taxes, depreciation and amortisation (EBITDA) amounted to 93 million kuna, with a net loss of 136 million kuna. Achieved positive EBITDA indicates the fact that in the crisis year of 2020, the tourism segment achieved a level of operating profit and liquidity sufficient for the operation of normal business, they explained from Maistra. In addition to the blossoming nautical sector, their campsites last year had ''full colour'' occupancy in comparison to hotels, which were also weaker than the private accommodation sector, but fortunately that changed this year.

Due to the continuation of the coronavirus pandemic during the first part of 2021, Maistra's business activity decreased, but sales of 335 thousand accommodation units were realised, which represents growth of 113 percent when compared to last year's reporting period, and is at 60 percent of 2019's figures.

In the first six months of this year, the Maistra Group generated 296.5 million kuna in operating revenue, which is about two and a half times more than last year, and is also at the level of 66 percent of the same period in 2019. A positive result before interest, taxes, depreciation and amortisation (EBITDA) was achieved in the amount of 49.2 million kuna. Although we're still waiting for the results for the third, key quarter, the physical occupancy of hotels this summer suggests significantly better results than last year, for all tourist companies on the Adriatic coast.

So far, only the Pula Arena Hospitality Group has reported on their results for this summer season, revealing that operations in the Republic of Croatia exceeded expectations during July and August, with total unaudited revenue in these two months reaching approximately 90 percent of the total revenue in the same period back in 2019.

Revenue generated in August 2021 is at the level of revenue generated in August 2019. “This result was achieved without the usual gradual growth of seasonal activity, at a time when the rules on covid passports and testing were still in force, and when certain countries from which people usually come had placed travel restrictions on those coming to and arriving from Croatia. Our second region, which consists of operations in Germany, Hungary and Serbia, has also shown signs of recovery, although the pace of such recovery varies depending on the market and is slower compared to the Croatian holiday tourism segment. Unaudited total revenue for this region in July and August represents 39 percent of the total revenue realised back during the same period in 2019. However, with the reopening of the market and the continued progress of the vaccination rollout, we expect this sort of recovery to continue,'' they stated from the company.

This excellent tourist season has generally positively surprised the entire sector, because although improvements were expected in comparison to last year, no one could have predicted that August would almost reach pre-pandemic figures and that fiscalisation would even exceed those numbers. Namely, in August 2021, 4.3 million arrivals and 30.7 million overnight stays were realised in Croatia, equal to 59 percent more arrivals and 46 percent more overnight stays than in the same period last year.

Now that it appears things are back on track in comparison to a dire 2020, Croatian employers from some of the most negatively affected industries are on the hunt for qualified staff and this issue is becoming more of an issue than the pandemic and lockdowns were. People who had always worked in construction, tourism and catering and hospitality began moving away from those fields in search of more stability, and it will now prove a challenge to attract them back to the sector which so easily dropped them.

Investments were halted, shelved and in some cases binned entirely as a result of the deep uncertainty the public health crisis caused. If those blocked investments can now get moving, we might just be seeing the light at the end of the tunnel of a truly horrendous and unprecedented period in history.

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

Monday, 11 October 2021

CNB Governor Boris Vujcic: Croatian Inflation Rate Could be Higher

October the 11th, 2021 - CNB Governor Boris Vujcic has stated that the Croatian inflation rate could be higher, adding that while forecasts of domestic economic growth are positive, there are many negative risk projections to take into proper consideration, too.

As Poslovni Dnevnik writes, CNB Governor Boris Vujcic spoke in Croatian Parliament on Thursday and explained that, unlike the forecasts for Croatian economic growth, which are generally very good, the projections of inflation are dominated by negative risks, ie those that could lead to higher inflation rates.

In Parliament, where he presented the Croatian National Bank's semi-annual piece of information on the nation's overall financial situation, price stability and the implementation of monetary policy in the second half of last year, Vujcic reminded those present of the CNB's projections for economic growth of 8.5 percent this year, and of 4.1 percent in 2022, which, he estimated, will have a positive impact on both the situation with employment and the situation with average wages.

"Due to the sheer amount of uncertainties which still remain in place, it's possible that these projections will not end up actuallybeing realised, but unlike the previous ones, the positive and negative risks are balanced," said Vujcic. He explained that the negative risks to the domestic economy relate to the possibility that the epidemiological situation in the Eurozone will worsen in the fourth quarter and that any remaining restrictive measures will be tightened once again, which would result in weaker foreign demand and as such, negatively affect Croatian exports.

When it comes to the situation with inflation, it will accelerate to 2.3 percent this year, and slow slightly to 2.1 percent in 2022. In the previous part of the year, the acceleration of inflation occurred mainly under the influence of rising energy and food prices, said CNB Governor Boris Vujcic, emphasising the fact that the current projections of inflation are dominated by negative risks, ie those that could lead to higher rates eventually.

For more on Croatian monetary policy, follow our politics section.

Saturday, 9 October 2021

Croatian Household Financial Assets Grow Slowly Due to Lack of Faith in Shares

October the 9th, 2021 - Croatian household financial assets increased last year, probably because there was very little available to spend anything on due to the pandemic and lockdowns, but this is still less than the global average and a lack of love for shares among Croats has a lot to do with it.

As Poslovni Dnevnik/Tomislav Pili writes, Croatian household financial assets increased last year, but remained less than the world average, which is attributed to the weaker performance of the domestic capital market and the unpopularity of shares among Croatian citizens, according to Allianz's annual report on global wealth. The report analyses the assets and debts of households across almost 60 countries. According to Allianz's data, the gross financial assets of Croatian households increased by 5.3 percent in 2020, reaching 71 billion euros, and the main driver was bank deposits, which make up almost half of all financial assets.

The sixth richest in the region

Another major driver of growth was insurance and pension fund assets, which rose 8.3 percent, thanks in part to declining interest rates. Securities, on the other hand, fell by 3.4 percent, which, according to Allianz, reflects the poor performance of the Croatian stock market and the fact that Croatian savers - compared to most neighbouring countries - avoid investing in capital markets. Net Croatian household financial assets increased by 6.3 percent, and with a per capita amount of 12,510 euros, Croatia ranks 32nd on the list of richest countries. As such, Croatia is the sixth richest country in its immediate region, ranking below Slovenia (25), the Czech Republic (26), Estonia (27), Hungary (30) and Lithuania (31), but well above Bulgaria (35), Poland (37), Slovakia (38) and Romania (40).

According to this report, the key to rapid asset growth lies in the portfolio structure. For example, Americans hold 55 percent of their assets in securities, primarily stocks, and have profited even more from the stock market jump in recent years. Thus, in the last five years, the rise in stock prices has been responsible for 70 percent of the total increase in the value of financial assets in the United States. In Western Europe, on the other hand, less than 28 percent of assets are invested in stocks.

Two new records

Globally, financial assets increased by 9.7 percent last year and reached 200 trillion euros for the first time. Savings were the main driver of the increase in household wealth in the world, because, as has been previously stated, in the conditions of lockdowns that drastically reduced personal consumption, the global phenomenon of "forced savings" appeared and savings jumped to a record 5.2 trillion euros. Due to "forced savings", for the first time in history, bank deposits grew at a double-digit rate of 11.9 percent. The previous record of 8 percent was set back in 2008 during the previous financial crisis.

Last year also brought a rarely seen gap between economic growth and household wealth. Namely, global financial assets grew by 11.6 percentage points more than world economic growth. Back in 2008 alone, during the peak of the then economic crisis, a similar difference of 12 percentage points was recorded, but in the opposite direction. At the time, financial assets fell sharply, but global GDP remained very much in the red. Therefore, financial assets set another historic result last year - they exceeded the value of 300 percent of global GDP. Allianz expects the trend of increasing savings to continue.

For more, make sure to check out our lifestyle section.

Sunday, 3 October 2021

Croatian Economic Indicators Looking Positive, CNB at 8.5%

October the 3rd, 2021 - Croatian economic indicators that have been arriving over more recent months have been well and truly "trampling" on some recent forecasts on the pace of economic recovery, ie this year's GDP growth.

As Poslovni Dnevnik/Jadranka Dozan writes, only a few months ago, the Croatian National Bank revised the growth estimate upwards (to 6.2 percent), and now they're calculating that Croatian GDP growth rate will reach 8.5 percent this year. The latest projection was made by Governor Boris Vujcic at the Financial Market conference held in Opatija.

This is primarily based on the expected results of tourism, from which revenues, instead of the recent projections of 70 percent of those from pre-pandemic 2019, should reach as much as 90 percent. The CNB now calculates that the GDP growth rate will reach 8.5 percent this year.

Expectations from exports...

In addition to tourism and consumption, more rapid growth in 2021 than expected is also suggested by trends in merchandise exports, but in parallel with such dynamics of recovery after a sharp decline in 2020, expectations for next year are declining. The CNB now sees it at 4.1 percent in 2022, with, as the governor says, the risks associated with the pandemic and inflation, ie disruptions in supply chains.

However, indications of the return of production from Asia to the west may be an opportunity for part of that production to move to Croatia, according to the central bank. In any case, this year's Croatian economic indicators turned out to be closer to the forecasts of a number of foreign banking groups and think tanks whose GDP growth forecasts from a few months ago (of seven, eight percent or more) seemed too optimistic until quite recently.

The latest set of data that arrived from the Central Bureau of Statistics - on industrial production, retail trade and trade in services - is on the trail of a faster pace of recovery than originally expected. Thus, according to the CBS, the volume of industrial production back in August was 5.2 percent higher than it was back during the same month last year.

After 2020, in which the coronavirus crisis was reflected in a drop in production of 3.4 percent, it is the ninth consecutive month of growth on an annual basis. The annual growth rate of production in August accelerated when compared to July (3.9 percent), and if the period from the beginning of the year to the end of the eighth month is observed, production now stands at 8.3 percent higher than it did last year.

When it comes to year-on-year comparisons in August, the production of so-called intermediate goods, there was an increase of almost ten percent when compared to August last year, and a solid 6.6 percent was also recorded in terms of capital goods. When it comes to non-durable consumer goods, the increase in production was more moderate (3.5 and 1.5 percent), while the decline, by four percent, was recorded only in the category of durable consumer goods.

In addition to the effect of the base period, and with the continued strengthening of both Croatian and foreign demand, the industry has seen a slow increase in the number of insured people, according to HZMO data, which encourages positive expectations, Raiffeisen Bank analysts said in a flash review of the latest figures on industrial production.

The impact of the base effect has long followed the comments of various other Croatian economic indicators. It is also partly responsible for the latest annual retail sales growth rates. Back in August, retail consumption increased by 18.3 percent year on year.

In addition to the mentioned base effect, such double-digit growth is a consequence of more favourable trends in tourism, and it was certainly contributed to by, as they say from RBA, "moderately positive trends on the labour market."

August was the seventh month of consecutive (annual) growth in terms of Croatian consumption, and this series was preceded by 11 months of decline under the influence of the coronavirus crisis.

Double-digit growth rates

As with industry, retail sales in August saw accelerated growth year-on-year when compared to July when retail sales rose by 12.8 percent.

The growth of retail turnover in the retail trade of food, beverages and tobacco products exceeded 15 percent, while turnover from trade in non-food products (except trade in motor fuels and lubricants) recorded a stronger jump, only slightly less than 20 percent annually.

Cumulatively, from the beginning of the year to the end of August, retail trade recorded a 13.5 percent increase in turnover compared to the same period last year. Over the past year, retail sales fell by 5.8 percent in real terms.

The data from the Tax Administration on fiscalised receipts for the month of September signal the fact the next monthly announcement of the CBS on trade turnover will be in the form of a double-digit growth rate, although this data will also reflect this year's strengthening of inflationary pressures.

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

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.

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