Friday, 8 April 2022

Exports in Jan, Feb Jump By 42.5%, Imports By 39.7%

ZAGREB, 8 April (2022) - In the first two months of 2022, Croatia exported HRK 26.1 billion worth of goods, up 42.5% on the year, while imports went up 39.7% to HRK 40.4 billion, the national statistical office said on Friday.

The foreign trade deficit was HRK 14.4 billion and was HRK 3.7 billion higher than in the first two months of 2021. The export-import ratio was 64.4%, as against 63.2% at the same time last year.

Exports of goods to EU member states totalled HRK 18.9 billion, up 47.9% on the year, while imports went up 28.6% to HRK 29.8 billion.

Exports to non-EU countries increased 29.9% to HRK 7.2 billion, while HRK 10.6 billion worth of goods was imported from them, up 84.4% on the year.

Expressed in euros, Croatia exported 3.5 billion worth of goods in the first two months of 2022, up 43% on the year, while imports increased 40.2% to 5.4 billion.

The foreign trade deficit was €1.9 billion.

Exports of goods to EU member states totalled €2.5 billion (+48.4%), while imports amounted to €3.96 billion (+29%).

Exports to non-EU countries increased 30.3% to €954.2 million, while imports jumped 85% to €1.4 billion.

For more, check out our business section.

Wednesday, 23 March 2022

Herbie: Croatian Stop Smoking Teas to be Placed on Spanish Market

March the 23rd, 2022 - Croatian stop smoking teas created by young Slavonian Luka Soldo (21) are set to enter the Spanish market.

As Poslovni Dnevnik/Sergej Novosel Vuckovic writes, young Slavonian Luka Soldo (21) got rid of his own nicotine addiction with a few innovative herbal preparations that he makes himself. Making rolls like cigarettes, from plants, and without tobacco, he realised they were helping him, so he designed his own project.

He and his family invested 5,000 euros and in Podolje in Baranja back in 2019 and then they started to procure, mostly from their own home fields, various herbs, which they picked, cut, dried, chopped, processing everything by hand. They then packaged them and presented them as the Herbie brand, not for smoking, but for drinking - a mixture of teas. With that move, the first Croatian stop smoking teas were born.

Last year, Herbie was crowned the best entrepreneurial idea and awarded 25,000 euros in an international competition of the Crown programme of the Sisak-Moslavina County Development Agency Simora.

The market has somewhat recognised these truly unique Croatian stop smoking teas, they are available through the Herbie webshop and in a couple of specialised stores in Zagreb, Split, Rijeka, Osijek and Zadar, but the goal is to work on the visibility of the brand. As of today, Herbie is also heading for the increasingly popular Kickstarter, with a crowdfunding funding campaign, Soldo wants to raise 1,500 US dollars to invest in marketing.

"We set that amount so that we'd manage to reach it on the very first day, we want to introduce the brand to the public and make people aware that there are herbal mixtures with which people can stop smoking,'' explained the young entrepreneur.

He recently presented the Herbie brand in Barcelona at the world's largest mobile telecommunications fair, the Mobile World Congress, and agreed on placing the product in Spain.

For more, check out Made in Croatia.

Saturday, 19 March 2022

Russian Sanctions Problematic for Croatian Wood Floor Manufacturers

March the 19th, 2022 - Croatian wood floor manufacturers have become an unlikely victim in the harsh but necessary sanctions most of the world has imposed on Russia following its unjustified invasion of neighbouring Ukraine last month.

As Poslovni Dnevnik/Jadranka Dozan writes, the proverbial earthquakes triggered by the Russian invasion of Ukraine across global markets - primarily through supply chain disruptions, and then the prices of energy, food, various industrial raw materials and goods - aren't, of course, bypass the wood sector. Croatian wood floor manufacturers are far from immune.

In addition to an already quite complicated business environment, some new complications related to certain sectors are now beginning to arise almost on a daily basis. This is particularly the case in the wood and paper industries, when it comes to fuel chips, plywood logs and the like. A decision was prepared as a counter-sanction aimed at countries on Russia's hostile list, from the US to the European Union (EU), and is scheduled for the end of the year.

For some European companies, but also Croatian industrial companies and retailers, the related delivery problems are even greater. All of these difficulties only work to further emphasise the long-standing belief that the raw material potential Croatia boasts should be better used.

This means investing in capacities and technology that would result, among other things, in the production of greater added value. It's worth really highlighting the fact that the Croatian wood sector is one of the few industries where the country actually has all of the proper raw materials for the job.

Over recent days, Bjelin, owned by Darko Pervan and which started building a wooden floor factory in Ogulin last year, announced that the group had decided to increase and improve investments in existing facilities and speed up the completion of a new Croatian factory. The company says this should make a significant contribution to replacing part of the wooden floor production capacity that is now being lost in connection with the Russian war against Ukraine.

However, for most of the companies within the HUP-Association of the Wood and Paper Industry, the problems they're facing are currently in a stronger focus.

"Economic sanctions imposed by the EU, and thus Croatia in relation to economic relations with the Russian Federation, as well as the announced decision of Russia to ban the export of birch wood products, are causing very serious problems for Croatian wood floor producers," said Ivica Pasalic, adding that the EU's decisions should point to very high penalties for violating sanctions in any way, including through third countries.

Russia produces 75 percent of the world's birch plywood production and their manufacturers have been the dominant suppliers to a number of our two-layer parquet manufacturers. As Pasalic pointed out, practically all of them have had very serious problems when it comes to production and are in danger of being stopped entirely. Finding alternative solutions, on the other hand, is neither quick nor easy.

The Association also intends to try to arrive to a solution through social dialogue with the competent ministry, because, as he said, a large number of workers work in these factories, and they're threatened with losing their jobs, and companies are shutting down production.

Stjepan Vojinic from the management board of the Bjelin Group pointed out that the situation with the shortage of raw materials and semi-finished products caused by the war in Ukraine is serious for all European producers of various types of wooden floors, but also the wider furniture industry.

The most affected, he said, are those countries that don't have the primary raw materials at hand (mainly oak) in the flooring industry, where Ukraine, Russia and Belarus participated with approximately 30 percent of those total needs. In addition, the issue of the general dependence of the European furniture industry on HDF and plywood, primarily from Russia, is coming to the fore.

As usual, crises can be seen as opportunities. "Nobody likes to have to develop and grow at the expense of other people's troubles, but this is a situation that we didn't want and we couldn't have had any influence over it in any way, so we shouldn't be ashamed of that and we should try to use it," said Vojinic.

The Bjelin Group, he says, is working hard to accelerate its planned investments that will lead to growth in production and implementation of new technologies.

“How successful we'll be depends only on us, because we have to start our production of new Woodur wood floor coverings, which we now have in Sweden, and we'll have that here in Croatia as soon as possible, too. The new plan is to have the final finishing by the end of this year, and the complete production by the end of the next year,'' announced Vojinic.

It's worth noting that Bjelin gets all its oak raw materials from Croatia, but Russia and Ukraine are also large exporters of oak and other wood materials for the flooring industry, and have significant parquet production, which is now directly affected by the war and the accompanying sanctions.

 According to company estimates, 25 percent of oak planks produced for European markets come from Russia and Ukraine. Due to all of this, it has been calculated that many construction projects are now in danger of significant delays due to the cancellations of deliveries.

This, of course, doesn' only apply to floor coverings. Other players in the wider wood sector, from wood processors to retailers, are also facing complex supply chain problems owing to the current dire situation between Russia and Ukraine. Some will say that until recently, they "flirted" with foreign partners about prices, and now it's a much bigger challenge to even try to ensure delivery.

Mladen Jambrovic, the first man of Iverpan, says that quarterly or multi-month detailed planning no longer works, now they are much shorter due to disruptions and the general level of unpredictability of deliveries. Demand, he says, is not falling.

The construction sector is quite active, and after the preparations for the tourist season were delayed last year due to the uncertainty surrounding the coronavirus pandemic, this year they started much earlier, which ultimately affects the demand for wood products related to interiors.

Emphasising the complexity of the overall business conditions, he noted that in the production of plywood, for example, goods today are ordered for delivery in two, three or four months. In addition, it is an energy-intensive activity, with gas being the main energy source.

For wood centres and/or furniture manufacturers, there are also problems related to the situation with some ancillary goods, products and markets, from steel (fittings, hinges) to glue, fillers or cardboard; these are all segments of considerable importance to both Ukraine and Russia. All in all, good demand today is accompanied by many "buts", and this will continue to have a very strong effect on Croatian wood floor manufacturers.

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

Tuesday, 15 March 2022

LNG Terminal "Star" of 2021's Exports, Slovenia Main Market for First Time

March the 15th, 2022 - Krk's LNG terminal contributed enormously to Croatia's export ''cake'' last year, with neighbouring Slovenia becoming the main market for the very first time.

As Poslovni Dnevnik/Marija Brnic writes, double-digit export growth rates, published by the Central Bureau of Statistics (CBS) for the first month of this year (44 percent) and last year (28 percent), used to be just a pope dream, and although there are reasons for joy and many good developments, there isn't much space for any euphoria quite yet.

Such a percentage jump was largely due to the low comparative base, due to the coronavirus-induced lockdown in the first part of 2020 and tumbling oil and gas prices, ie the recovery of the global economy and the price jump in terms of energy costs last year.

However, the manufacturing industry has "accumulated" a record 15.4 billion euros in revenue from foreign markets and there is almost no activity that isn't now growing, and there is some good news for export statistics, too. Two events definitely marked last year, when it comes to exports - the role of LNG Croatia (the LNG terminal on Krk) and the first time in which Slovenia rose to the position of the top Croatian export market.

State statistics have recorded a real explosion when it comes to both electricity and gas exports - in just one single year the jump was as much as 421 percent, and in absolute numbers, more than a billion euros worth of the above commodities were exported.

It seems that the Krk LNG terminal contributed the most, whose imported gas quantities remained here in Croatia, and this released significant quantities of gas from other sources, primarily from Russia, which were then exported to other countries. It isn't clear from the CBS data to which countries these quantities were placed, but a visible trace of their origin is left on the import data, due to the strong growth of imports from the USA, Nigeria and Egypt.

Neighbouring Slovenia, on the other hand, ascended the export throne in the last month of last year, and judging by earlier estimates from the Croatian Chamber of Commerce (HGK), the previous item from the statistical records is also crucial for such a result. In total, goods worth 2.43 billion euros were exported to Slovenia from Croatia, which is an increase of 58 percent when compared to the previous year. Just one year earlier, exports to the Slovenes weakened compared to pre-pandemic 2019 by 5.6 percent.

The neighbouring countries of Slovenia and Croatia are very focused on each other and are, as a rule, each other's third export market, but Slovenian figures are still enviable for Croatia, despite the fact that last year they had weaker export growth and significantly higher import growth than Croatia did. Last year, Slovenian exports increased by almost 20 percent and exceeded 39 billion euros, while imports, with almost 31 percent growth, amounted to 42 billion euros. Croatia was Slovenia's fourth export market, but even with high export growth, it wasn't among the top five markets from which it imports goods.

According to the SBS, Slovenia mostly imports from Germany, Italy, Switzerland, China and Austria, and their main export markets are Germany, Switzerland, Italy, and along with Croatia, Austria. Croatia's five main customers, along with Slovenia, are Italy, which just last year began to return to the first position, which it briefly handed over to Germany in 2020, and in both exports exceed 2 billion euros, while Hungary is in fourth position, with Bosnia and Herzegovina coming in fifth.

Croatia also exports more than a billion euros to nearby Austria, and a record result has been achieved on the markets of neighbouring Serbia and across the Atlantic over in the United States. Trade is also growing with Turkey, and it is interesting to note that, contrary to earlier data, the year ended with an increase in exports to China, but also a decline in imports on an annual basis. It's worth noting that the Republic of Croatia imports the most from Germany, out of a total of 28.3 billion euros, 4.2 billion came from that country, followed by Italy, Slovenia, Austria and then by China.

In the currently two most sensitive markets, Russia and Ukraine, Croatia ended the year before the crisis with 204 million euros of exports to Russia and 58 million to Ukraine, with exports to Russia growing and being the largest in six years, while in Ukraine the placement of goods was by 0.9 percent below the level recorded back during the previous year, and those two years were record years for Croatian exports to Ukraine.

Given the events of the current war and harsh sanctions against Russia, it is certain that the figures on the import side with these warring countries will remain high for Croatia; Last year, 463 million euros worth of goods entered Croatia from Russia, and 44 million came from Ukraine.

For more, check out our business section.

Saturday, 12 March 2022

Croatian Food Companies Hope High Quality Will Help Conquer Emirates

March the 12th, 2022 - Croatian food companies are hoping to come out on top and rely on their high quality products as they attempt to break into the extremely demanding Emirates market.

As Novac/Jutarnji/Vladimir Zrinjski writes, more than half a million people walked through the huge Expo complex in Dubai last Sunday. The endless queues in front of the national pavilions were becoming more and more frequent a sight as it all drew to a close, and as tourists were busy studing the various technological advances from around the world, Croatian companies were networking and making new deals.

On the top floor of the building overlooking the bulky Al Wasl dome, a Croatia-Dubai business forum was held, organised by the Croatian Chamber of Commerce (HGK), with about a hundred representatives of Croatian companies from across various sectors. Earlier contacts and commitments were deepened and the ground was being prepared for new collaborations, and the Gulf perspective for Croatian companies is particularly bright in the food industry.

For obvious climatological reasons, the United Arab Emirates is highly dependent on food imports, and it is estimated that up to 50 percent of imports of these products are destined for re-export to the Middle East, Asian and African countries. At the same time, large retail chains tend to bypass local importers and distributors and facilitate administration and logistics for exporters (for example, sharing space in containers), which reduces overall costs.

Apple exports, in which Middle Eastern countries currently account for about 14 percent, could prove to be a particularly fruitful niche. The prices of apples in Croatian export terms to that part of the world are more than three times higher than the prices towards the European Union and surrounding non-EU European countries.

The delegation also included Tihomir Peraic, the director of Fragaria, which has been present on the market of the Emirates and neighbouring countries, such as Oman and Saudi Arabia, for years through the export of apples.

''With the arrival of the global coronavirus pandemic and the difficulties with transport it created, which coincided with severe frost damage, everything stopped. This was an opportunity to renew contacts with existing customers and try to find some new ones,'' he explained.

Fragaria already has a contract with the LuLu Group, which has hypermarkets in all of the countries which make up the Arabian Peninsula, as well as with some smaller retailers from the Emirates and Oman, but says there is no relaxation to be enjoyed there because the competition is "terrible" to contend with.

''Nobody can really compete with the Poles in terms of prices, and the French have traditionally dominated this field through Carrefour and other chains, as have the Italians. There is potential, but we need to fight and look for an opportunity to position ourselves with quality,'' added Peraic when discussing Croatian food companies and their chances.

Martina Pernar Skunca, the marketing manager of Paska Sirana on the island of Pag, a company that has also probed the market in Dubai, pointed out the two main advantages of the "business to business" conversation at the forum:

''Apart from being able to open ourselves up to a new market, these types of talks are also an opportunity to connect among the businessmen themselves. We had a few meetings in Dubai, some of them were very specific, so we hope to do business here as well,'' she said.

For more on Croatian food companies and other enterprises, check out our business section.

Thursday, 17 February 2022

Sladic Winery From Skradin Finds Popularity in Germany and Sweden

February the 17th, 2022 - The Sladic Winery from near Skradin is impressing foreign visitors to Croatia from across the world with their flavours and their tasting room. The Germans and Swedes are among those who have had an impression left on them thanks to this Croatian winery.

As Poslovni Dnevnik/Marta Duic writes, the Sladic Winery is engaged in the production and cultivation of various indigenous Croatian varieties, they have vineyards in three locations which stretch over six hectares and produce a massive 35,000 bottles a year. The business is run by Joso and his sons Ivan and Marko, and in Plastovo near Skradin, they have a tasting room where guests from all over the world come and taste what they've produced. Ivan Sladic pointed out that the most common foreign guests are French, Americans and British nationals, and although their original market is the rest of Dalmatia, 20 percent of the Sladic Winery's production is exported to Sweden and Germany.

“Growing these vines and wine production has been in our tradition for a long time now and has evolved from generation to generation. The tradition began with my great-grandfather, but for the last 25 years, the Sladic Winery has had bottled bottles of the highest quality wine placed on the market. For us, the past year was challenging and unpredictable and marked by the collegiality of those in the catering and hospitality industry, as well as winemakers, to help get rid of old stocks in this difficult situation,'' said Ivan Sladic.

The Sladic Winery's current focus is on autochthonous varieties and they have as many as ten labels under their belts, and in 2020 they placed one of the first sparkling wines in Dalmatia from the Marastina variety. They believe in this variety the most and started building a business with it, and they make four different products from it - fresh maraschino, sparkling wine, aged wine in wood and dessert wine.

“Our Deorum, a maraschino dessert wine, has a special story behind it. It is produced according to a traditional recipe that is over one hundred years old. We also made a documentary about it, which showcases the entire production process. The maraschino dessert wine meant a lot to our region and was one of the biggest European brands. It was appreciated among people because the production process involved with it is very difficult, only 10 percent of the total amount of grapes is actually obtained, so we can say that it is real nectar in terms of wine,'' explained Sladic, emphasising that this wine was recognised back in 1934 by the Institute of General Pathology and the pharmacology of the Royal University of Zagreb, which approved for maraschino to be used for the preparation of medicines and medicinal wines.

As he added, this is a unique case in this country, and there are few examples in the world of a wine being officially included among medicines. They plan to plant two more hectares of the lasin variety, which thrives exclusively in the area, to place their babic on the market, and to improve the technology in their cellar from the Wine Envelope.

"We care about constantly improving our products in order to achieve the maximum, because our varieties have excellent parameters to be side by side with the world's great wines," they concluded from the Sladic Winery.

For more, check out Made in Croatia.

Tuesday, 8 February 2022

Croatian Products Popular in Foreign Spar Stores in Italy, Hungary...

February the 8th, 2022 - There are quite a few Croatian products which have become much loved by foreign buyers shopping in Spar stores in the nearby European Union (EU) nations of Italy, Hungary and Slovenia.

As Poslovni Dnevnik/Marta Duic writes, the fact that the Spar retail chain is an important partner for domestic producers and the placement of their products on the shelves of many other European Union countries is best evidenced by the fact that despite the global coronavirus pandemic which continued throughout 2021, Croatian products, ie their manufacturers, generated more than 106 million euros in turnover through the Spar sales network alone in the nearby countries of Italy, Austria, Slovenia and Hungary.

The total turnover of Croatian products in Spar stores grew last year as well, which brought domestic producers an increase in revenue of as much as six million euros compared to 2020.

The biggest increase in terms of exports of Croatian products was recorded in Austria, where the first four exporters enjoyed as much as 40 percent higher revenue in 2021 compared to the record year of pre-pandemic 2019.

The data showed that the neighbouring Italians are loyal to Croatian products such as the much loved truffles and white cod, the Hungarians love Croatian ice cream and water, and the Slovenians have discovered Croatian dried meat products under the label Dobro (Good), which is sold by Zito, whose turnover in 2021 was twice as high as it was during the year before.

Although the list of major exporters is still dominated by large Croatian products and their producers such as Atlantic, Podravka, Cromaris, Dukat and Vindija, small producers include lip balms made by Vimi, Dobro and New Bakery, one of the largest European baklava factories, located in Donji Stupnik.

For more on Croatian products, producers, companies and exports, make sure to check out Made in Croatia.

Sunday, 16 January 2022

Croatian Exports to Slovenia Blow Up, 2019 Record Exceeded by 25%

January the 16th, 2022 - Croatian exports have done well despite the circumstances posed by the ongoing coronavirus pandemic, and exports to neighbouring Slovenia have exceeded pre-pandemic 2019's record by an impressive 25%.

As Poslovni Dnevnik/Marija Brnic writes, statistically speaking, ''last year'' isn't quite over yet, but it is already clear that 2021 was a record year in economic relations with Croatia's most important foreign trade partners, in which Italy returned to first place on the list of the main Croatian export markets.

Last year will also be recorded as a time when perhaps the strongest shift was achieved in relations with neighbouring Slovenia, especially when it comes to Croatian exports.

Economic relations between the two neighbouring nations are traditionally good, but in the first ten months of 2021, the Central Bureau of Statistics recorded that trade increased sharply and in absolute terms greatly exceeded the level of the pre-pandemic year of 2019, and if the trend did continue in November and December 2021 (which is yet to be confirmed), it is likely that the total exchange will exceed the results of the record year of 2019. In the case of Croatian exports, this has already happened.

From January to October 2021, as much as 1.808 billion euros worth of goods from Croatia were exported to Slovenia, 171 million euros more than during the whole of 2019, which was a record, and if you look at the same period in that year, the result is better by as much as 452 million euros.

Speaking in percentages, back in 2020, in the conditions of the then very slow and unstable economic life, Croatian exports to Slovenia stopped their growth for the first time in more than a decade and had a deficit on an annual basis (of about 6%), but last year, in that 10 month period, it grew by 42% on an annual basis), largely making up for lost time, so compared to the same period, Croatian exports to Slovenia were higher by 25%.

This result gains even more strength and weight if compare it with Croatian exports to Germany, the second market for domestic products, which in those first 10 months of 2021 amounted to only slightly more. The reason for the convergence of sales values ​​to these two markets should not be sought in the negative trend with Germany, since Croatian exports had a better performance here as well.

What was the generator of accelerated growth of foreign trade between Croatia and Slovenia, you may ask? The Croatian Chamber of Commerce assesses that the step forward in trade relations at the general level, and thus in relations with Slovenia, was greatly contributed to by the increasingly pronounced trend of rising global prices.

"According to the analysis of the structure of Croatian exports to Slovenia, the causes of this growth can be mostly attributed to the increased value of the exports of petroleum oils and oils derived from bituminous minerals and electricity, which is due to a significant increase in energy prices on the global market last year."

The CBS states that electricity worth 45.7 million euros was exported to Slovenia in 2019, as were petroleum oils and oils obtained from bituminous minerals, worth 15.5 million euros. In the first nine months of 2021, electricity was exported in the amount of 183.3 million euros, and petroleum oils and oils obtained from bituminous minerals were exported in the amount of 67 million euros.

A different structure of exports

At the same time, there was a smaller increase in Croatian exports of aluminum products, various plates, sheets and strips, despite the strong rise in metal prices. They illustrate this with the fact that in the observed period of 2021, these goods were exported worth 118 million euros, while in the conditions of much lower prices back in 2019, the result is only slightly weaker, 110 million euros.

The value of Croatian exports of parts and accessories for motor vehicles, as well as glass products, they say, is declining. It's worth mentioning that in the structure of products in 2021, according to available data, electricity had the largest share (11.8%), and compared to the data on the structure from the previous year, in which it was not among the main export products, it exceeded the traditional main export products - aluminum plates and sheets (7.6%), and parts and accessories for motor vehicles (4.8%), and medicines and chocolates, which last year were not even among the top five products for the Slovenian market.

The automotive industry was going through a turbulent period last year, so Croatian manufacturers, the largest of which is AD Plastik, which cooperates with Revoz, slowed down its sales.

New jobs are now growing, especially in the services segment. Sasa Muminovic, President of the SLO-CRO Business Club, and a member of the Management Board of AquafilSLO and President of the Management Board of AquafilCRO in Oroslavje, a member company of the Italian group Aquafil, says the same. A survey conducted by this association among Slovenian and Croatian businessmen at the end of 2021 reveals a number of interesting things about how they see each other.

The characteristics of their neighbourly relationship

What characterises these relations is that Croatia is Slovenia's first country when they decide to enter foreign markets, and not, for example, Italy or Austria. Moore than half of the respondents estimated that they don't really see a difference in the business climate between these two countries, and as many as 62% of Slovenian businessmen believe that there are no obstacles to doing business in Croatia, while 26% find those obstacles in the country's infamous administration.

The answers are similar on the Croatian side, but both sides, which Muminovic points out are important, believe that economic relations are not disturbed by politics (only 6.7% of Slovenian and 2.6% of Croatian businessmen think differently).

For more, check out our dedicated business section.

Friday, 26 November 2021

Covid-Related Economic Fears Still Strong for Croatian Exporters

November the 26th, 2021 - Croatian exporters are still dealing with concerns related to the ongoing coronavirus pandemic and the economic issues that it has created over the best part of the last two years.

As Poslovni Dnevnik/Ana Blaskovic writes, in a sea of ​​bad news which has been circulating since the outbreak of the coronavirus pandemic - restrictions, bottlenecks in supplies, energy spikes and the latest headaches due to inflation - there's also a bit of good news here and there. The euro slipped to its lowest value against the dollar since July last year, giving exporters dealing in the single currency a competitive advantage globally.

The effect unfortunately won't really spill over significantly to Croatian exporters and other domestic producers because the lion's share of foreign trade takes place in euros. However, good export trends could be disrupted by new ''lockdowns'' which have been reintroduced in some European countries, especially Austria and Germany.

The single currency lost about 8 percent of its value against the US dollar in one year. The decline reflects the fact that the European Union had to pay a very high price during a pandemic, from the initial confusion to public conflict over vaccines that have led to high death rates and blows to respective EU economies.

Despite the rapid recovery we've seen in recent months, markets continue to perceive relative lagging behind global players.

“Europe has a fundamental problem of reducing the trade surplus because it has two major challenges; rising energy prices and raw material vulnerabilities ”, explained Zeljko Lovrincevic from the Institute of Economics. The implementation of the Green Agenda, which is being firmly pushed by richer EU member states and is the backbone of EU policy, carries a high price for the poorer nations.

"Although the euro has weakened considerably, not only against the dollar but also against other currencies, trade has deteriorated as import prices have risen," Lovrincevic said, noting that EU producers ultimately didn't benefit too much from the currency's frequent weakening, and that's the situation for Croatia as well.

Eurostat figures clearly testify to the slowdown in the bloc's trade. The EU's trade surplus with the world fell to 4.8 billion euros back during the month of August this year, from 14 billion euros in the same month a year ago. In September, the total trade surplus fell to 7.3 billion euros, while in 2020 it amounted to 24.1 billion euros.

The weaker euro was also contributed by the position of the European Central Bank that the current inflation is only a temporary disturbance due to which it will not hurry with the raising of interest rates. ECB chief Christine Lagarde has made it clear that tightening monetary policy would "do more harm than good" and that it is "unlikely" that the conditions will be met next year either.

Consumer price growth accelerated to 4.1 percent in the Eurozone and 4.4 percent at the European Union level in October. In the conditions of a stable exchange rate, inflation in Croatia spills over through import prices, especially in regard to energy and food, and prices rose by 3.8 percent in October.

"For the EU, this means that inflation will not only be a short-term phenomenon, but that it will be present in the long run instead. This is a consequence of targeting monetary moves according to the needs of the weakest member states, so it is expected that the ECB will be the last to raise interest rates,'' it was explained.

Croatian exporters, who are often rumored to be the best part of the economy, will be more affected by accelerating prices in the business environment. The more inflation persists, the expectations for further growth are built into contracts on salaries, suppliers, pensions… The first test of whether an inflation clause will be arrived to in this country will be the current negotiations between the state and public sector unions on a new collective agreement. If the unions do succeed in breaking the ice, the others will go the same way too.

Local producers will thus not benefit from a weaker euro as they are firmly tied to exports to the European Union; exports to other member states make up about 70 percent of the total value of exports, while a significant part of exports to EFTA and CEFTA countries are realised solely in euros, they stated from the Croatian Chamber of Commerce (HGK).

They added that in the global market over more recent years there have been significant oscillations in the movement of the euro against other currencies, so when contracting new export transactions it is not possible to be guided by the current depreciation trends.In addition, it should be emphasised that regardless of the current trend of the weakening of the euro, its average value against the dollar (and thus against currencies linked to the dollar) and the Swiss franc in the first ten months of this year was higher than in the same period last year.

There is now an immediate problem placed at the door of European and Croatian exporters - new ''lockdowns'' that were eagerly rejected by politics until recently, but which have been reintroduced by some nations. "The introduction of new covid restrictions in several Eurozone member states will certainly have additional adverse effects on the economy of the Eurozone, to which the majority of Croatian exports are tied. This isn't good news for Croatian exporters and producers at all, especially since the Eurozone trade surplus to the rest of the world decreased significantly in 2021 compared to what we saw in 2020, and Croatian exporters depend on the likes of Germany and other Eurozone members, so their economic weakening means and lower potential for our export placement and Croatian GDP growth,'' explained worried Croatian exporters.

For more, check out our business section.

Tuesday, 26 October 2021

Croatian IT, Food, Construction Companies Interested in Business with Turks

October the 26th, 2021 - Numerous Croatian IT companies, as well as several from other sectors, including food and construction, are among the most interested in working with the Turks.

As Poslovni Dnevnik/Marija Brnic writes, the fact that Turkey is an increasingly important economic partner for Croatia has been well and truly confirmed by the data which shows that more than 700 companies are participating in the latest cycle of B2B talks that are being held with Turkey as part of the Croatian Chamber of Commerce's Go Global - Go Virtual project. The talks will run until October the 29th, 2021, and so far 543 companies from Croatia and 161 from Turkey have been involved.

The structure of interested companies that are looking for partners for cooperation is interesting, because the largest number, every seventh, comes from the Croatian IT sector, food and beverage production, and the construction sector, in which companies from the two countries have been cooperating.

About 60 companies come from the production of machinery and equipment, and the metal industry. About 50 companies dealing with automation and robotics, as well as electronics, are also discussing cooperation, but all other production sectors, as well as services, from consulting to tourism, are also quite strongly represented.

There are slightly less than 29 domestic enterprises interested in cooperation in the field of waste and recycling, and this interest is interesting because over more recent years this activity has raised Croatian exports to Turkey to absolute record levels.

This year, more precisely in the first seven months of it, exports almost reached the total realisation from last year, which was also a record export year on the Turkish market, in which a total of 183 million euros worth of goods were placed even in the conditions of the ongoing global coronavirus pandemic.

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

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