Monday, 9 May 2022

Exports in Q1 up 36.6%, imports +41.2%

ZAGREB, 9 May 2022 - In the first three months of 2022, the value of Croatia's commodity exports totalled HRK 41.7 billion, up 36.6% on the year, while imports increased by 41.2% to HRK 67.4 billion, the Croatian Bureau of Statistics (DZS) reported on Monday.

The foreign trade deficit in that period amounted to HRK 25.6 billion, 8.5 billion more on the year, while the coverage of imports by exports was 61.9%, whereas in the comparable period of 2021 it was 64%.

The export of goods to the EU in Q1 totalled HRK 30.2 billion, 42.9% more on the year, while imports from the EU increased by 31.8% to HRK 50 billion.

Exports to non-EU countries increased by 22.6% to HRK 11.6 billion while imports from non-EU countries soared by 78% to HRK 17.3 billion.

Expressed in euros, Croatia's commodity exports in Q1 totalled €5.5 billion, an increase of 37.1% from Q1 2021, while imports increased by 41.8% to €8.9 billion.

The foreign trade deficit amounted to €3.4 billion in that period.

Goods exported to the EU in Q1 totalled €4 billion, an increase of 43.4% compared to Q1 2021, while exports to non-EU countries increased by 23.1% to €1.5 billion.

Goods imported from the EU totalled €6.6 billion (+32.3%), while imports from non-EU countries soared by 78.7%% to €2.3 billion.

(€1 = HRK 7.544176)

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

Saturday, 7 May 2022

PM: Confidence of Credit Rating Agencies Shows Croatia is on Right Track

ZAGREB, 7 May 2022 - The confidence of international credit rating agencies shows that Croatia has remained on the right track after a strong economic recovery in 2021, Prime Minister Andrej Plenković said on Saturday.

His statement came after the Fitch Ratings agency reaffirmed Croatia's investment rating at BBB with a positive outlook.

The government sees this as an indication of the country's economic stability while dealing with the consequences of the Russian military invasion of Ukraine, inflationary pressures and other challenges.

The trend was reversed during the term of the present government. Fitch restored the credit rating to BB+ in January 2018 and to BBB- in June 2019. On 13 November 2021, the agency upgraded the rating for another notch to BBB with a positive growth outlook, the government said in a statement.

"The confidence of international credit rating agencies shows that, after a strong economic recovery in 2021, Croatia remains on the right track. We continue to stimulate growth by implementing structural reforms and further using EU funding," Plenković said.

He noted that in all the crises so far the government had stood firmly behind the citizens, helping them with sets of measures to alleviate the impact of increased energy prices and inflationary pressures.

"Euro area membership next year will bring many benefits to the Croatian citizens and businesses while at the same time making the country more resilient to crises," the prime minister said.

The government statement said that the positive outlook was based, among other things, on the assumption that Croatia will be in a position to adopt the euro as legal tender on 1 January 2023 given that it meets the criteria and reform measures under the ERMII mechanism. Fitch considers highly like a positive outcome for Croatia's accession to the euro area this year.

Fitch projected Croatia's growth rate for 2022 at 3.3%, which is more than the 3.0% forecast by the Ministry of Finance, and expects growth to pick up to 3.7% in 2023, which would spur investment as a result of the use of EU funding, the government said.

For more, check out our business section.

Tuesday, 29 March 2022

Croatia Open to Further Investment by German Companies, PM says

ZAGREB, 29 March 2022 - Germany is Croatia's key trade partner and Croatia is open to further investment by German companies, Prime Minister Andrej Plenković said on Tuesday after meeting with a delegation of the German Eastern Business Association.

The meeting discussed the strengthening of Croatian-German economic cooperation and the main areas for the further investment by German companies in Croatia, the government said in a press release.

Germany remains Croatia's number-one foreign trade partner and trade in 2021 totalled €6.4 billion, it added.

The meeting at the government was also attended by Foreign Minister Gordan Grlić Radman and Economy Minister Tomislav Ćorić.

The German Eastern Business Association is a regional initiative of the German economy for 29 countries in Central, Eastern and Southeastern Europe, the South Caucasus and Central Asia,. It has around 350 member companies.

Plenković informed the delegation of Croatia's strong economic recovery in 2021 and the government's plans to further stimulate growth, the utilisation of European funds as part of the National Recovery and Resilience Plan and the new EU budget, and upcoming steps to join the Schengen and euro areas.

The prime minister also informed the delegation of tax relief measures as well as those to advance the investment and business climate in Croatia.

He also commented on the Russian aggression in Ukraine, Croatia's measures to help Ukraine, and the war's repercussions on energy and food supplies.

The German companies presented their existing and potential projects in Croatia, confirming their willingness to continue to cooperate and invest.

To date, German companies have invested €3.9 billion in Croatia, making Germany one of the biggest investors, the government said.

Saturday, 19 March 2022

U.S. Economist Stiglitz Believes Croatia Should Take More Time Before Euro Adoption

ZAGREB, 19 March 2022 - US economist Joseph Stiglitz, who won the Nobel Memorial Prize in Economic Sciences in 2001, has said that Croatia should take some more time before the changeover to the euro, assessing that disadvantages could be higher than benefits due to the ongoing geopolitical risks.

This is an open issue, said this 79-year-old researcher in his address to Croatian reporters in Brussels where he attended the 8th Cohesion Forum.

The 8th Cohesion forum is a large-scale political event held every three years, bringing together high-level representatives from European institutions, central governments, regional and local representatives, economic and social partners, NGOs and academics to focus on the major challenges of European cohesion policy.

Commenting on Croatia's plans to adopt the euro as sole legal tender, Stiglitz said on Friday that from the economic point of view, potential benefits are more restricted than potential costs.

There are arguments in favour of taking some more time before the country's entry into the eurozone. However, it is a political decision, he said.

Croatia is making preparations for the changeover to the euro in 2023, and the country's top officials, including Prime Minister Andrej Plenković, highlight Croatia's readiness to adopt the euro.

Stiglitz, who is the author of the book entitled "The Euro: How a Common Currency Threatens the Future of Europe" said during the European Forum Alpbach  in 2020 that the euro, as sole legal tender, deprived a country of two important instruments which the researcher deems to be essential in adjusting a national economy to shocks. One of those instruments is the possibility of adjusting the exchange arrangements, that is its capacity of using monetary policies and consequently changing interest rates, he explained then.

The euro area currently has 19 members. All EU countries, except Denmark, have the obligation to introduce the euro. Denmark participates in ERM II.

In July 2020, Croatia and Bulgaria entered the the Exchange Rate Mechanism II (ERM II), the key step to entry into the euro area. Until then Croatia had met all criteria to join the euro area except for membership in ERM II.

Upon Croatia's admission to ERM II, Prime Minister Plenković said that the admission to the ERM II meant a lot for the country's financial stability and strengthened its reputation, and also pointed out a high euroisation in Croatia.

For instance, 71% of household savings have been kept in the euro in the last eight years. Also more a than a half of loans are pegged to the euro. Foreign visitors coming from the euro area's member-states generate as many as three fifths of overnight stays in Croatia, and 57% of the value of the commodity exports are to those countries.

Saturday, 19 March 2022

PM: Affirmation of Croatia's Credit Rating is Message of Confidence

ZAGREB, 19 March 2022 - Prime Minister Andrej Plenković said on Saturday that Standard and Poor's affirmation of Croatia's credit rating at 'BBB-/A-3' was a message of trust in and encouragement to the government to keep preserving the economic stability despite the inflation and the impact of the war in Ukraine.

PM Plenković tweeted that the decision of that credit rating agency to affirm Croatia's ratings with stable outlook "is a message of confidence in and encouragement" to the government to continue taking measures conducive to the economic stability and stable growth, thus weathering the inflationary pressures and the consequences of the war.

He writes on the Twitter account that the priorities are given to the implementation of the National Recovery and Resilience Plan and to the further absorption of European funding for the faster growth and the energy and green transition of Croatia.

Our target to join the euro area in 2023 creates prerequisites to additionally boost the economy's competitiveness and raising our credit ratings, he added.

Standard & Poor's on Friday affirmed Croatia's credit rating at 'BBB-/A-3' with a stable outlook, however, it warns that repercussions of Russia's invasion of Ukraine can affect the Croatian economy.

"The stable outlook reflects our expectation that Croatia's economic growth will remain steady over the coming two years despite inflationary headwinds and the pan-European macroeconomic consequences from the conflict in Ukraine," it says.

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

Friday, 25 February 2022

Croatia's Economy Records Highest Expansion of 10.4% in 2021

ZAGREB, 25 Feb 2022 - Croatia's economy grew by 10.4% in 2021, according to first estimates given by the national statistical office (DZS) on Friday.

According to the DZS, Croatia's Gross Domestic Product increased 9.7% in the fourth quarter of 2021 compared to the corresponding period in 2020.

In 2020, the corona crisis affected the national economy which contracted about 8% that year, while in 2021 it recovered at a rate of 10.4%.

The Croatian economy saw the expansion in the last three quarters in a row.

In 2021 Q4, the growth was on the back of the rise in all the components of the GDP, including household consumption, state spending, exports and investments.

Friday, 18 February 2022

Prime Minister: Measures Will Protect Citizens and Economy From Energy Price Rises

ZAGREB, 18 Feb 2022 - Prime Minister Andrej Plenković said on Friday that the package of measures for cushioning the electricity and gas price rises, worth HRK 4.8 billion, was a wise state intervention that would, as of 1 April, protect citizens and a large part of the economy from rising energy prices.

"This way, we are showing the government's readiness to make a wise intervention that benefits citizens in key moments," Plenković said, talking about the package of measures at a government session.

The measures apply to all citizens, a large part of the economy, especially micro and macro businesses, and special measures have been introduced for socially vulnerable groups, as well as for pensioners, farmers, and fishermen, the prime minister said.

"In addition to the caps on the prices of petroleum products, we have made a good, clear framework which also involves tax relief, social transfers, and subsidies, and which will cushion the price rise as of 1 April," he said.

The prime minister also said that over the past two days, based on well-prepared documentation for the European Commission, it had been decided that the deadline for using the money from the European Solidarity Fund for earthquake relief in Zagreb would be extended for another year, from June 2022 to June 2023, to overlap with the deadline for the use of money allocated for the earthquake in Banovina.

He said that he now expected "intensive work and dynamics of the reconstruction process" in order to use that money and engage other sources and ensure as soon as possible that the reconstruction process would accelerate.

For more, check out our politics section.

Thursday, 10 February 2022

European Commission Forecast: Croatia's 2021 Growth Second Highest After Ireland

ZAGREB, 10 Feb 2022 - The European Commission on Thursday significantly revised up its forecast for Croatia's economic growth in 2021 to 10.5%, which is the second-highest growth rate in the European Union after Ireland, while downgrading its projections for this year and next compared to its autumn outlook.

The European Commission released its Winter Economic Forecast on Thursday, saying that the Croatian economy achieved a full V-shaped recovery in 2021, surpassing the level registered prior to the 2019 crisis.

After a fall of 8.1% in 2020, the Croatian economy is estimated to have grown by 10.5% in 2021. The only other EU member state with faster growth is Ireland, with a rate of 13.7%.

In its autumn forecast, released in November 2021, the Commission projected Croatia's growth for last year at 8.1%.

As far as inflation is concerned, it is forecast at 2.7% for 2021, 3.5% for 2022 and 1.6% for 2023. These figures are at the level of the euro area average and slightly lower than in the EU overall.

The Commission expects the Croatian economy to grow at a rate of 4.8% this year (compared to 5.6% forecast last autumn) and at 3% next year (the autumn forecast was 3.4%).

After strong growth in the second and third quarters of 2021, growth is expected to have slowed down in the fourth quarter based on short-term indicators of economic activities and price increases.

Exports of commodities and services contributed to the recovery, with tourism playing a key role as well as personal consumption.

Although a strong increase in demand for finished products led to a growth of imports, the contribution of net exports to growth will remain positive.

Investment is also expected to increase, reconstruction should be stepped up after the earthquakes in Zagreb and the Banovina region, as are favourable financial conditions and the implementation of the National Recovery and Resilience Plan (NPOO).

The revised budget indicates that government spending will make a positive contribution to this year's growth.

The risk balance is slightly tilted to the downside, mainly due to problems in implementing projects following the earthquakes. which could negatively affect investments.

This year, inflation could be 3.5% compared to 2.7% last year, mostly due to increased commodity prices. The high inflation rate in the first half of the year is expected to slow down in the rest of the year. Inflation will be most affected by prices of energy and unprocessed food. It is expected to fall below 2% in 2023.

The Commission estimates that after a growth of 5.3% last year, the EU economy will grow at a rate of 4% this year and 2.8% next year. Growth in the euro area is forecast at 4% in 2022 and 2.7% in 2023. The EU as a whole reached pre-pandemic levels in the third quarter of 2021 and all member states are expected to return to pre-pandemic levels before the end of 2022.


Monday, 7 February 2022

New Car Sales Up 1.9% in January Year-on-Year

7 February 2022 -This January, 2,971 new passenger vehicles were sold in Croatia, up 1.9% or 56 more vehicles than in January 2021 when 2,915 were sold, the Promocija Plus market research agency said on Monday.

Škoda sold the most passenger vehicles in January, selling 365 vehicles, which accounted for 12.3% of all sales.

Volkswagen ranked second with 347 new cars sold, a share of 11.7%, and Kia was third with 224 cars sold, a share of 7.5%.

The Škoda Octavia was the best selling model in January with 185 sold cars, followed by the Dacia Duster with 114 cars sold. 

This year's first figures indicated that more buyers are opting for hybrid vehicles as against diesel fuel cars. In January 1,477 or 49.7% of the vehicles sold were petrol cars while only 659 or 22.2% were diesel cars and 584 people bought a hybrid car which is a solid share of 19.7%.

Car buyers purchased 142 natural gas-run cars (4.8%) while 109 or 3.7% of new car owners opted for an all-electric vehicle, Promocija Plus reported.

Friday, 8 October 2021

Export in Jan-Aug Up by 25.5%, Import by 19.8%

ZAGREB, 8 Oct 2021 - Croatia's commodity exports in the first eight months of 2021 was HRK 87.7 billion, up 25.5% on the year, while import increased 19.8% to HRK 134.6 billion, the national statistical office said on Friday.

The foreign trade deficit increased by HRK 4.45 billion to 46.9 billion.

Coverage of imports by export was 65.9%.

The export of goods to EU countries was HRK 59.7 billion (+25.2%), while import was HRK 103.4 billion (+16.3%).

Export to non-EU countries went up by 26.1% to HRK 28 billion, while import went up by 33.3% to HRK 31.1 billion.

Expressed in euros, Croatia's export of goods in the first eight months of 2021 was €11.6 billion, up 25.1% on the year, while import increased by 19.4% to €17.9 billion.

The foreign trade deficit was €6.2 billion.

Commodity exports to EU countries was €7.9 billion (+24.8%), while import was €13.7 billion (+15.9%).

Export to non-EU countries went up by 25.6% to €3.7 billion, while import went up by 32.8% to €4.1 billion.

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