Tuesday, 26 May 2020

Croatia's Foreign Debt Down In January, But Is Going To Rise In 2020

ZAGREB, May 26, 2020 - Croatia's foreign debt totaled HRK 41.1 billion in January, falling by 6.5% compared to January 2019, however RBA analysts predict a rise in the debt throughout 2020 due to the corona crisis.

Croatia's gross foreign debt of 41.1 billion at the end of January 2020 rose by 0.6% from December 2019 when it amounted HRK 40.9 billion, however, it contracted by 2.8 billion euros or by 6.5% on the year, according to the figures recently published by the Croatian National Bank (HNB).

However, considering the new circumstances in connection with the coronavirus pandemic that caused a lockdown globally as well as in the Croatian economy, RBA analysts expect the deterioration in Croatia's external vulnerability.

The analysts said that a positive streak in the current account since 2013 would be likely snapped, and the country's gross foreign debt would rise both in the real and nominal terms.

"Recovery and relaunching the economic activity, which will require high amounts of funding, will lead to a rise in the borrowing abroad by all key sectors," said the analysts of the Raiffeisenbank Austria (RBA).

The recall that the government has recently planned more borrowing both on the local and foreign markets.

As a result of growing debt and the expected sharp economic downturn, Croatia's gross foreign debt to GDP ratio is likely to increase, too.

At the end of 2019, Croatia's gross foreign debt to GDP ratio was 75.7%.

(€1 = HRK 7.579243

Wednesday, 5 February 2020

What Crisis? Istrian Municipality Enjoys Wages High Above Croatian Average

As Novac writes on the 5th of February, 2020, when looking at the paid net salaries of employees of Istrian companies for the last year, the most ''handsome'' income is in the municipality of Rasa - 9,088 kuna. Salaries in this municipality, with a little more than 3,000 inhabitants, are almost 30 percent higher than the Croatian average, which amounted to around 6,500 kuna last year.

According to a report from local portal Glas Istre (the Voice of Istria), the largest number of companies were recorded in Pula, wa total of 2,968 of them with 14,890 employees working for them. Second place is occupied by Porec with 1,383 companies and 10,787 employees, in third place comes Rovinj with 910 companies and 5,315 employees.

The average net wages paid by these employers are the highest in Rovinj with a net wage of 7,140 kuna, ​​Vodnjan with 7,015 kuna, Novigrad with 6,238 kuna, Porec with 5,764 kuna, Pula with 5,568 kuna, and Umag with an average salary of 4,765 coming in last place.

However, when it comes to companies located in municipalities, employers with the highest net salaries can be boasted of in the Istrian municipality of Rasa with 9,088 kuna, followed by Lupoglav with 7,121 kuna and Vrsar with 7,015 kuna.

Otherwise, the average net salary paid to an employee in the whole of Istria amounted to 5,699 kuna, or 3.4 percent more than in 2017, and 2 percent more than the Croatian average salary at the level of employees in companies, which was 5,584 kuna. In 2018, there were 11,006 companies with 53,948 employees operating in the territory of Istria in 41 cities and municipalities, which is 8.9 percent more than there were back in 2017.

The largest development trend was recorded in Porec, which in 2011 had 5,868 registered legal entities, and at the end of 2018 as many as 7,546. Following is Rovinj, which has grown from 4,660 to 5,416 legal entities, Vodnjan grew from 528 to 1,043 legal entities and Pula experienced an increase from 22,183 to 22,936 legal entities.

For more on the Croatian average wage, wage growth and working in Croatia, follow our lifestyle and business pages.

Monday, 13 January 2020

Poor Economic Climate Slowing Down Opening of Croatian Companies

As Adriano Milovan/Novac writes on the 12th of January, 2020, the poor entrepreneurial/economic climate, money worries and mass emigration are increasingly reflected in the dynamics of opening new Croatian companies and businesses.

According to Fina's data, about a thousand fewer Croatian companies and trades were founded through Hitro.hr last year than were founded back in 2018, which is a startling decrease of almost 15 percent.

During 2019, a total of 5914 Croatian companies were established through Hitro.hr, according to Fina's data. Just one year earlier, 6822 Croatian companies and other types of businesses were established through the same service, while back in 2017, the number of established Croatian business entities through that service stood at a much higher 7081. A decrease was also present in 2018 compared to 2017, but it accelerated significantly last year.

Crafts (obrti) recorded a particularly large decline: while 245 were established through Hitro.hr in 2017 and 128 in 2018, only 48 were established through the service last year.

The number of established simple limited liability companies is also down from 2018. In 2018, 4347 were established through Hitro.hr, while 3498 were founded last year, equalling almost a fifth less. On the other hand, in 2019, the number of limited liability companies increased slightly. Back in 2018, 2347 were established through the Hitro.hr service, and 2368 were established last year, which is equal to about one percent more.

Last year, economists were pointing their fingers at a poor and discouraging entrepreneurial climate in Croatia, but also to mass emigration and the demographic crisis, which led to the absence of entrepreneurs in some Croatian municipalities. In addition, they warn that Croatia is too large a public sector, which displaces private initiative. In these circumstances, nothing, not even the ability to quickly start a business through Hitro.hr, can help that much.

''It's a combination of a number of factors which have been present in Croatia for more than two decades now, which have further enhanced emigration. The Croatian economy is simply not an incentive for startups,'' says Damir Novotny, a well known economic analyst.

Novotny points out that in Croatia there are limited possibilities for financing new entrepreneurial ideas through venture capital funds, which in the west play a large role in the first entrepreneurial steps of people with ideas, but who lack the money to navigate entrepreneurial waters. In addition, Novotny adds, the incentives for self-employment provided by the state to the unemployed are relatively small here. In other words, the development of entrepreneurship in Croatia is a major obstacle to an underdeveloped infrastructure, with a particular focus on finance, although some progress has recently been made in this area.

However, Novotny sees perhaps a greater obstacle to a stronger development of entrepreneurship in Croatia in the staggering amount of bureaucracy. Administrative barriers in Croatia remain large and cumbersome, he warns, and regulations are complicated and often changing.

''The entrepreneurial climate in our country is still bad. When abroad, when it comes to administration, you've got the "see you once a year" rule, in our country, it's common for inspections to come knocking on the doors of Croatian companies as soon as they start business, and there are visits that entrepreneurs have to make to various government institutions,'' Novotny notes.

He believes that young people should be directed more towards entrepreneurial waters, so that their goal is not to look for jobs in the public sector after graduation, but to decide to start their own businesses. Although changes have taken place in recent years, they are still, according to economists, insufficient.

Until these changes occur, Croatia will continue to be perceived by the world as a country where it is difficult and expensive for business owners to play, with the state playing a major role in economic life.

Make sure to follow our dedicated business page for much more on Croatian companies, entrepreneurs, products and services.

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