Wednesday, 3 April 2019

Vienna Institute: Croatia Continuing to Slow Down, Kosovo is Rising Star

As Adriano Milovan/Novac writes on the 2nd of April, 2019, the economic expansion period for most of the transition countries, including the Republic of Croatia, is now over, and in the coming years we can count only on very modest rates of economic growth, this was the message from experts from the renowned Vienna Institute for International Economics Studies (WIIW).

According to the latest forecasts of the Vienna Institute, this year, Croatia can expect a growth rate of 2.6 percent. However, in the coming years, economic growth will slow down even more, meaning that the Croatian economy will likely grow at a rate of 2.5 percent in 2020 and again in 2021. Although the GDP growth rate of 2.5 percent doesn't deviate much from the previous growth rates in Croatia, given that they were still less than in other comparable countries of the so-called "New Europe", it's worth noting that this rate is still less than was previously expected.

Additionally, and more concerningly yet, the Republic of Croatia will be among the new EU member states with the lowest rates of economic growth of all. On the other hand, the fastest growing economies among transition countries will rather surprisingly be non-EU European countries, such as Kosovo and Albania and even more surprisingly, Moldova, at least according to an analysis taken by the esteemed Vienna Institute. According to these forecasts, Kosovo's economy, for example, was to grow at a rate of 4.1 percent this year, in the following year at a rate of four percent, and in 2021, at a rate of 3.9 percent.

In their forecasts, the analysts of the Vienna Institute cited the slowdown of economic growth in the world as a whole, especially in Germany, and the strengthening of protectionism in world trade and uncertainty brought about by Brexit (should it occur at all), as among the main reasons for the ''cooling'' of the transition economies.

Openly, however, the question remains about how the current crisis in Uljanik will reflect on the Croatian economy as a whole. Vladimir Gligorov, a longtime analyst at the Vienna Institute and now an external associate, says the events in Uljanik will have negative effects on the Croatian economy in the short term, primarily through the activation of state guarantees and the cost of dealing with former workers who will be left jobless, but in the medium term, it shouldn't actually reflect all that much on the macroeconomic image of the country that significantly.

The attitudes of Croatian macroeconomists, Zeljko Lovrinčević from the Zagreb Institute of Economics and Zdeslav Šantić, the chief economist of OTP banka, don't differ significantly from the above statement from the Vienna Institute, and they also don't expect huge consequences on the Croatian economy from the collapse of Uljanik. Moreover, Lovrinčević believes that the first half of this year could be even better for Croatia than expected, whereas we will likely only feel a slight slowdown in the second half of this year and next year.

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Click here for the original article by Adriano Milovan for Novac/Jutarnji

Sunday, 31 March 2019

Croatia and China: New Agreements and Chances for Croatian Companies

Croatian companies have a chance for further growth and more exporting should Croatia decide to deepen its business ties and cooperation with China, the country which is currently undertaking the mammoth task of constructing Pelješac bridge.

As Suzana Varosanec/Poslovni Dnevnik writes on the 31st of March, 2019, at the 8th Summit of heads of government of central and eastern European countries and China, which will be held from the 9th to the 12th of April in Dubrovnik, the "Dubrovnik Guidelines" document is expected to be adopted, which will lay out the activities in this format in the forthcoming phase.

The summit on the EU and China set to take place in the Belgian capital of Brussels on the 9th of April is expected with interest, and Chinese Prime Minister Li Keqiang is coming to Croatia. There are bilateral talks between Keqiang and Prime Minister Andrej Plenković on the agenda, as well as the signing of several already concluded bilateral agreements in Zagreb. In line with the things that are set to be dealt with and concluded at the summit, Croatia and China could strengthen their blossoming cooperation with as many as ten brand new agreements. Other major Croatian expectations for the strengthening of overall relations with China are also awaited with gritted teeth, with the greatest interest being expressed in the areas of infrastructure, tourism and SMEs.

After the construction of Pelješac bridge, which is being built by China's CRBC, will yet more new infrastructural advances, such as the modernisation of Croatia's railway system, soon come to pass? The plans are also for the Chinese and Croatian prime ministers to visit this huge construction site down in southern Dalmatia. The Chinese delegation will consist of around 250 members, and that isn't including the 300 business community representatives coming to the 9th business forum ''16 plus 1''.

A total of more than 700 entrepreneurs have been registered, and many opportunities are on offer to Croatian companies when looking at entering the giant Chinese market, meaning that the initiative is on them. B2B meetings can be arranged with the help of an application created by the Croatian Chamber of Commerce (HGK), and as Croatia's SME coordinator, it will officially launch the 16 + 1 coordination mechanism for small and medium-sized enterprises. The major promise for Croatian companies which operate within a multitude of different sectors lies in exports when it comes to deeper cooperation in doing business with China.

Croatia's visibility for the Chinese is continually growing, by about fifteen percent annually, while the number of tourists from China has increased by an enormous 120 percent over the past two years alone. In 2019, a record 300,000 Chinese tourists are expected to visit Croatia, which is the fastest growing market in the whole of the Republic of Croatia.

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Click here for the original article by Suzana Varosanec for Poslovni Dnevnik

Saturday, 30 March 2019

Croatia Spends the Most on Food in the European Union

According to food expenditure statistics, Croatia is still spending significantly more than the European average, with the British paying the least towards food and drink in all of Europe.

As Poslovni Dnevnik writes on the 30th of March, 2019, expenditures for transport of the average Croatian family were equal to the cost of housing and for the first time, they reached fifteen percent of the average household budget. Based on the Household consumption survey, which is otherwise conducted every three years, the Central Bureau of Statistics reported that the average Croatian family spent 82,530 kuna per household in 2017, which is a monthly cost of about 6,800 kuna.

Croatia takes first place when it comes to the amount allocated to food in the household budget, but it is about five percentage points less than ten years ago when every third kuna was spent on food, Večernji list writes. The other countries which follow Croatis are Romania, where 26 percent of the typical household budget goes to food, while in Serbia, which is considered a third country, yet remains an EU candidate, that stands at 22 percent.

According to data on food expenditures, Croatia is still significantly above the European average, where 12 percent of household budgets typically go on food and drink, and in developed western economies, that figure is usually between 7 and 10 percent. The dominance of food expenditures is a feature of poorer countries with lower wages. Food prices in Croatia are similar, if not more expensive than in Western Europe, while salaried employees receive three to four times lower salaries, which ensure a much higher quality of life and go on including things such as outings, recreation, travel, and further education.

In Croatia, there is still one item where the standard of living has remained the same to a certain extent, and that is the typical cost of housing and the consumption of energy, to which 15.7 percent of the household budget goes, while at the EU level, the energy bills and rent account for a much higher 24 percent of the typical household budget. The British pay the leasr for food, and it typically accounts for a mere 7.2 percent of the British household budget, yet on the other hand, 27 percent of a typical British household budget is spent on various housing costs. Only Cyprus, Lithuania and Malta have lower housing costs than Croatia.

When looking at nominal amounts, just a couple of years ago, the average Croatian household spent 21,353 kuna per year on food and drink, of which the highest costs are for meat, costing about 6,700 kuna, and non-alcoholic beverages, costing 1,900 kuna, these beverages were mostly coffee, mineral water and various types of juices. In Croatia, at least according to the latest statistics, there is actually less smoking and drinking going on, and alcohol and cigarettes have fallen below three percent of the typical household budget to 2.9 percent (2,421 kuna per year), for the first time ever.

In Croatia, communication costs continue to above the EU average, on which 2.5 percent of the household budget is spent. Bulgaria and Serbia are the most similar to Croatia in terms of spending, while communication costs in other post-socialist countries is significantly cheaper and accounts for about three percent of the typical household budget. The average Croatian family pays 4,113 kuna annually for telephone services, which is almost twice as much as it allocates for health care services. For transport, about 13,000 kuna is spent annually, while clothing and footwear have about 6,000 kuna spent on them.

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Wednesday, 27 March 2019

To Work or Not to Work: Almost Half of Croatia Economically Inactive?

As Novac/Sanja Stapic/Slobodna Dalmacija writes on the 27th of March, 2019, why exactly are the powers that be in Croatia constantly talking about importing workers from around the world if they can be found among students and retired people already here? This is a valid question that is increasingly being put forward by Croatian employers, and it could bring results. A new law has put the spring back in the step of many, and riled others, as it allows retirees to be employed for four hours a day, and still retain all of their rights to their retirement and pensions.

It was in this exact manner that Spar Croatia launched an employment program for retired individuals which lasts for four hours, allowing them continued full access to their retirement benefits and offer a flexible employment schedule. Konzum followed the same path not long after, and this giant company is announcing in the media that they're on the lookout for new people, turning to students and also to retired people to whom they're offering part-time jobs, with pleasant and flexible working hours as extra bait.

With regard to the typical pension payout per month, and also given the fact that there are a great many people among the population who haven't yet ''served'' their full working lives and are perfectly healthy and capable of doing so, the average pension stands at 3,665 kuna, so it comes as no real surprise that more than 5,200 retirees are currently working part-time jobs. There will likely be even more joining them as time goes on.

Croatia boasts (alright, maybe that isn't the right word here) a large portion of the populace who don't work, haven't actually registered themselves as unemployed, aren't actually looking for work, and are between the ages of 16 to 64. At the end of September last year, according to a survey taken by the State Bureau of Statistics, an extremely concerning figure of 48.4 percent of Croatia's working-age population was economically inactive. This means that there are more economically inactive people in a normal state of health and who are perfectly capable of working than there are employed persons in Croatia. Of course, those working ''on the black'' or accepting cash in hand jobs, of which there are a great many, are more difficult to account for in this instance.

The survey carried out by the State Bureau of Statistics showed that out of all of the economically inactive persons in the country, 121,000 of those inactive people do want to work, but they aren't actively seeking employment, while 1.57 million don't want to work because of school, their age, illness and various other similar reasons. These other reasons may also include the desire to stay home to bring up their kids, but a large number do earn a living of some sort owing to the so-called grey economy.

For a country like the Republic of Croatia, in which 4.1 million people were registered as living according to the estimates of domestic statistics, 1.7 million inactive people is a very large number of people living their lives almost entirely outside the world of work, at least officially.

Economist Dr. Damir Novotny points out that Croatia currently doesn't have enough of a workforce in any given sector, which in one part is the result of the entirely wrong direction of the country's social policy and in another part, owing to the opening up of the European labour market for Croatian citizens.

''There is clear research on the fact that those who are able to work are excluded from labour market. It's one of the major problems and mistakes of [Croatian] governments over the past 10 to 15 years. We have a problem with the grey economy, we know it's big and many who are formally [registered as] unemployed aren't actually unemployed in reality. Thirdly, but no less significant, is the opening up of the labour market to the part of the working-active population who have a middle to high level of education, who are extremely easily integrated into the European labour market. We have these complex variables in the function of reducing working-active citizens, and on the other hand we don't have enough immigration policies,'' explained Dr. Novotny for Slobodna Dalmacija.

Employers, encouraged by the fact that today retirees can be hired as part-time workers, have decided to try to solve their problems in such a manner. Workers need them, and last year's quota for the import of foreign workers amounted to over 30,000 work permits, and this year that number could be considerably higher, and we already know that the tourism sector, otherwise Croatia's strongest sector, will be missing about 15,000 skilled workers.

The statistics show that the problem will become even worse as time goes on.

Because of the decline in Croatia's overall population and extremely adverse demographic trends, the number of working-age population is continuing to decrease, and back in September last year, there were just 3.5 million working people in the country, which is 110,000 less people than there were back at the beginning of 2010. During that period, the number of economically active people fell by 102,000 people to 1.82 million, the number of those registered as unemployed was reduced by 19,000 to 1.69 million, and so the negative trend continued.

Economists warn that Croatia will need a workforce, it also needs to work hard to activate the inactive population, the long-term unemployed, younger retirees and even people with certain disabilities. Some experts, such as Dr. Danijela Nestić and Ivo Tomić from the Zagreb Institute of Economics, have calculated that Croatia can increase its overall employment levels in only a relatively small manner, even it it managed to employ all the unemployed people and part of the economically inactive people who don't work for family reasons or because they're discouraged in their job searches.

Discouragingly, Croatia is the European ''champion'' with the most retired people who are still of working age, with the most people saying that they're somehow incapable, or too sick to work.

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Click here for the original article by Sanja Stapic for Slobodna Dalmacija

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