Saturday, 4 June 2022

German Media Says Croatian Eurozone Accession Good for Tourists

June the 4th, 2022 - The German media has claimed Croatian Eurozone accession which will now definitely take place on the 1st of January 2023 is a good thing for tourists and travellers.

As Poslovni Dnevnik writes, the opinion and subsequent decision of the European Commission (EC) that the Republic of Croatia meets all of the conditions for the introduction of the euro is important to the Germans. The tabloid Bild put it on their cover, and many other German media outlets are writing about it.

"Good news for everyone travelling to Croatia," wrote Bild, the headline of which emphasised that there will be no more trouble with the exchange of the euro into Croatian kuna. It is explained that the European Commission, among other things, monitored "inflation and exchange rate stability" and confirmed that Croatia meets the criteria. It also stated that the European Central Bank has concluded the same and quoted the statement of the President of the Commission Ursula von der Leyen, who said that the introduction of the euro will strengthen the Croatian economy, but also that Croatian Eurozone accession will strengthen the euro.

The Frankfurter Allgemeine Zeitung dedicated two articles to Croatian Eurozone accession. One noted that both the European Central Bank and the European Commission have determined that Croatia meets the criteria for the introduction of the euro and that this will be decided by EU finance ministers, according to Deutsche Welle.

Commentary published in the economic part of the FAZ emphasised that the European Commission "knows how to adjust economic data to suit political wishes".

"Such a practice can be seen with the Croatian introduction of the euro on January the 1st, 2023, which is now being recommended by the European Commission. In doing this, it is acting quite arbitrarily with the convergence criteria of the Maastricht Treaty. That tready attests to all non-euro-states (except Romania, which is a special case) that they meet the criteria for state budget stability - with the strange argument that the stability pact has been repealed and that there's nothing they could violate.

In the Croatian case, the treaty also has no interest in the fact that their debt amounts to about 75 percent of GDP, significantly more than the 60 percent prescribed in the Maastricht Treaty. This ignorance has its role models: Italy and Belgium were admitted to the monetary union as founding countries back in 1998, despite their great indebtedness, because they somehow belonged to that circle,'' recalls Frankfurter Allgemeine Zeitung.

The daily for economic issues, Handelsblatt, also emphasised that the ECB and the European Commission have determined that Croatia meets the criteria for the introduction of the euro and that it is set to become the 20th member of the Eurozone next year. It noted that ''all EU member states except Denmark have made a contractual commitment to one day introduce the single European currency, but governments can set the pace themselves. Sweden, for example, still has its own currency. In Eastern Europe, too, some governments are in no hurry to introduce the euro because they appreciate the benefits of an independent monetary policy,'' wrote Handelsblatt.

Numerous other German media (ARD, ZDF, Spiegel, Süddeutsche Zeitung,…) also reported on the green light of the ECB and the European Commission for Croatian Eurozone entry in 2023.

For more, check out our politics section.

Thursday, 2 June 2022

One Of Two Strategic Goals Achieved By Meeting Euro Criteria, PM Says

ZAGREB, 2 June 2022 - Prime Minister Andrej Plenković said on Thursday Croatia was one of the EU member states outside the euro area which had met all the criteria for membership in the European economic and monetary union, whereby one of the government's strategic goals has been achieved.

Speaking after a meeting with the European Commission Executive Vice President for An Economy that Works for People, Valdis Dombrovskis, Plenković said Croatian officials had the opportunity to hear the Commission's assessments on its convergence report on Croatia and the other countries still outside the euro area.

"Such a positive report on Croatia is very good, given that by all criteria, which are equal for all, we are the only country meeting the criteria for membership in the European economic and monetary union," he told the press.

The Commission presented the report yesterday, confirming that Croatia is one of the observed member states meeting all nominal convergence criteria and that its legislation is fully aligned with the Treaty on the Functioning of the European Union as well as the Statute of the European System of Central Banks and the European Central Bank (ECB).

The Commission, therefore, concluded that Croatia is prepared to introduce the euro on 1 January 2023, becoming the 20th euro area member state.

"It's particularly important that Croatia meets the price stability criterion. You have seen that over 12 months up to April this year the average inflation was 4.7%, and the reference value was 4.9%, so we were within that criterion," Plenković said.

It is also very important that Croatia has received confirmation from the ECB that it is below the Maastricht budget deficit criterion of 3% of GDP.

"Croatia no longer has macroeconomic imbalances and in this whole set of our efforts, from responsibly managing public finance, coming out of the excessive deficit procedure, raising the credit rating to investment level, the fact that we carried out all the reforms that were on the table after entering the European Exchange Rate Mechanism and the banking union on time, in line with the action plan, shows that by implementing the euro introduction strategy, Croatia has achieved one of the fundamental political goals during the terms of our two governments," Plenković said.

The other goal is entering the Schengen Area, he added.

For more, check out our politics section.

 

Wednesday, 1 June 2022

EC: Croatia Ready to Adopt the Euro

ZAGREB, 1 June 2022 - The European Commission on Wednesday concluded that Croatia was ready to adopt the euro on 1 January 2023, bringing the number of euro area Member States to twenty.

President of the European Commission, Ursula von der Leyen, who congratulated Croatia, was quoted as saying: "Today, Croatia has made a significant step towards adopting the euro, our common currency."

"Less than a decade after joining the EU, Croatia is now ready to join the euro area on 1 January. This will make Croatia's economy stronger, bringing benefits to its citizens, businesses and society at large. Croatia's adoption of the euro will also make the euro stronger," she said.

 The EC and the European Central Bank on Wednesday released reports on convergence assessing the progress of member-states in meeting the criteria for the admission to the euro area.

The report covers seven countries: Bulgaria, the Czech Republic, Croatia, Hungary, Poland, Romania and Sweden. Denmark has the permanent exemption from the obligation to adopt the euro.

The EC and the ECB prepare complementary biannual reports on convergence. The reports serve as a basis for the Council's decisions on whether the aspirants meet conditions for entering the euro area.

Croatia's adoption of the euro

"In light of the Commission's assessment, and taking into account the additional factors relevant for economic integration and convergence, including balance of payments developments and integration of product, labour and financial markets, the Commission considers that Croatia fulfils the conditions for the adoption of the euro. It has therefore also adopted proposals for a Council Decision and a Council Regulation on euro introduction in Croatia."

The Council is expected to make the final decisions on Croatia's euro adoption in the first half of July, after discussions in the Eurogroup and in the European Council, and after the European Parliament and the ECB have given their opinions, reads the EC's press release.

"The Report, therefore, marks a crucial and historic step on Croatia's journey towards adopting the euro."

The Croatian kuna joined ERM II on 10 July 2020 and observes a central rate of 7.53450 to the euro with a standard fluctuation band of ±15%. This is expected to be the exchange rate for the conversion.

Croatia has participated in the ERM II since 10 July 2020. It must participate in the mechanism without severe tensions and without devaluing its central rate against the euro for at least two years before it can qualify to adopt the euro. Being part of the Exchange Rate Mechanism is intended to help non euro-area countries prepare themselves for becoming part of the euro area. It is an important milestone towards adopting the euro.

The latest report reads that Croatia meets all the four convergence criteria and Croatia's legislation is fully compatible with EMU legislation.

The average inflation rate in Croatia in the year ending in April 2022 stood at 4.7 per cent, which is below the reference value, and it is likely to remain below the reference value in the months ahead.

Concerning public finances, Croatia meets the criterion of the deficit to GDP ratio which was 2.9% in 2021, below the reference value of three percent.

The public debt to GDP ration is above the reference value, however, last year it saw a strong decrease falling from 87.3% in 2020 to 79.8%, and this marked narrowing satisfied this criterion.

For more, check out our business section.

Wednesday, 25 May 2022

Less Than 1/3 of Citizens Think Croatia Ready to Introduce Euro, Survey Shows

ZAGREB, 25 May 2022 - Less than one third of citizens think Croatia is ready to introduce the euro on 1 January 2023 and a big majority, fears the introduction will lead to tacit price rises, according to the findings of a survey presented on Wednesday.

The survey was initiated by MEP Biljana Borzan and conducted by the Hendal agency in March and April, covering 805 respondents.

The findings show that 29.9% agree with the claim that Croatia is not ready to introduce the euro on 1 January 2023, while 45.5% do not agree and 24.7% neither agree nor disagree.

Also, 86.2% of respondents believe the introduction will be used to tacitly raise prices.

Borzan said the aim of the survey was not to create additional panic but to reassure citizens and give them clear data on why introducing the euro was good, and also to make the government eliminate the fears so that citizens would accept the euro without any problems.

She said that in Slovenia the gross pay went up by 46% and prices by 26% since the euro was introduced, and in Latvia by 67% and 10%, respectively.

Borzan said a minimum short-term rise in prices was a fact but that the long-term benefit was "very visible" for citizens and that she was sure it would happen in Croatia, too, "because entering the eurozone actually means economic profit."

She said Croatia's law on introducing the euro banned businesses from raising prices without justification but did not envisage sanctions.

The survey shows that 83.2% of respondents feel that businesses which convert prices unfairly should be publicly blacklisted.

Borzan said the government rejected such a proposal and that this was part of the problem. "The other is the non-inclusion of consumer associations and citizens so that we know what awaits us."

Furthermore, 83.8% of respondents feel the government's measures against price rises will be useless without good inspections, and over 50% feel that market inspectors are not doing a good job nor protecting citizens from higher prices.

Also, 81.4% of respondents feel that consumers in Croatia are insufficiently protected.

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

Monday, 23 May 2022

Croatia Could Get Positive Assessment on Euro Introduction on 1 June

ZAGREB, 23 May 2022 - The European Commission plans to issue a convergence report on 1 June which could give Croatia a final assessment on its readiness to adopt the euro.

European Commission Executive Vice-President Valdis Dombrovskis on Monday confirmed that the Commission plans to release its convergence report on 1 June.

"In Croatia debt ratios have declined significantly over the years and show a strong downward trend. This sends an important signal ahead of the convergence report that we will present on 1 June. As you know, Croatia aims to adopt the euro as its currency on January 1, 2023," Dombovskis told a press conference.

In its analysis of the macroeconomic situation in Croatia, the Commission notes that the country has made progress in reducing private debt and net external liabilities. It underscores that public debt remains high but continues its downward trend towards the situation prior to the COVID-19 pandemic. The banking system remains stable and liquid and the share of bad loans is decreasing. The potential for production growth has increased and funds under the Recovery and Resilience Mechanism can help deal with other vulnerabilities, the Commission says.

The Commission publishes its convergence report every two years. According to the last report in June 2020, Croatia had fulfilled all the criteria to enter the euro area except for membership of the European Exchange Rate Mechanism (ERM II).

Croatia soon met that criterion too, when it entered the ERM II on 10 July 2020.

The readiness to introduce the euro is determined according to convergence criteria, including price stability, regulated public finances, exchange rate stability, and convergence of long-term interest rates. National legislation is checked against the rules of the Economic Monetary Union (EMU).

Currently, the inflation rate is the only uncertain criterion at the moment. It must not exceed by more than 1.5 percentage points the average inflation rate of the three EU countries with the lowest annual inflation in the year preceding the assessment of the situation in the candidate country.

If Croatia gets a positive assessment, the finance ministers of the 19 euro area countries need to adopt the Commission's recommendation with a qualified majority.

The formal decision is delivered by Ecofin, comprising all EU finance ministers, after consultations with the European Parliament and following the June summit of EU leaders.

For more, check out our politics section.

Thursday, 12 May 2022

Croatia's Eurozone Accession Going As Planned, Lagarde Says

ZAGREB, 12 May 2022 - European Central Bank president Christine Lagarde has said that Croatia's accession to the eurozone is going as planned.

Asked by a Slovenian Television reporter if the rising inflation in Europe, the war in Ukraine, and the general crisis could delay Croatia's accession, Lagarde said Croatia remained very committed to that goal.

If we have learnt anything by now, it is that such dedication and adaptability are the main principles leading to progress. Slovenia abided by that, too, constantly confirming it, and I think Croatia is working very hard to introduce the euro, she said.

It's wonderful that very soon probably, we will welcome Croatia as the 20th member state. In doing that, we will have to calculate data and facts and review everything. We will do that together with the European Commission, and the ECB will participate in that. For now, we see that everything is going as planned, said Lagarde.

She visited Slovenia for the 20th anniversary of the country's central bank as an independent monetary institution.

For more, check out our politics section.

Monday, 9 May 2022

What Will Average Croatian Wage and Pension be in Eurozone?

May the 9th, 2022 - With Eurozone entry rapidly approaching and due at the very beginning of next year, just what will the average Croatian wage and pension be? It seems an increase is on the cards.

As Poslovni Dnevnik writes, when Croatia introduces the euro at the beginning of 2023, the average Croatian wage (net salary) will stand at around 900 euros, and an average pension will stand at around 320 euros, considering the fact that due to ongoing inflation, personal incomes and pensions across Croatia could increase slightly before the changeover from the kuna to the euro anyway.

If we take in some information and consider it relevant data on the average net salary across the EU back in 2021, which amounted to 1916 euros per month, it means that the average Croatian salary needs to be about a thousand euros to reach the EU average. In nearby Austria, the average net salary last year was 2053 euros, and in Belgium - an impressive 2091 euros.

In Bulgaria, the average net income last year was 413 euros, and the average Croatian wage was 797 euros, while the neighbouring Slovenians received an average of 1,038 euros per month back in 2021, writes Slobodna Dalmacija.

The Czechs were doing slightly better than the Croats were with a typical net salary of 813 euros, and the Danes were much better, with 3,100 euros, placing them at the very top of the European Union (EU). They are closely followed by the Swedes with a salary of 3062 euros.

The Estonians are also better paid than Croats typically are, with an average salary of 958 euros net, with the Latvians and Lithuanians being weaker with 648 euros and 645 euros respectively. The people of Cyprus receive an excellent 1,658 euros, and Malta also earns well from the Croatian perspective, with an average Maltese wage being about 2261 euros per month.

They are followed by rich EU countries: Finland with 2509 euros, France with 2157 euros and Germany with 2270 euros as an average salary.

The average Greek earns 917 euros, a Portuguese worker 846, a Pole 736, a Slovak 690, and a Hungarian 683 euros. Over in Romania, the average net salary is only 522 euros, meaning that only the Bulgarians are the poorest in the EU.

The average net salary in Italy is 1,762 euros, and in neighbouring Spain 1,718 euros. The real "heavyweights" are the Icelanders with 3435 euros and the Luxembourgers with 3009 euros, followed by the Irish with 2479 euros and the Dutch with 2263 euros.

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

Wednesday, 4 May 2022

Volume of Retail Trade in March Down Slightly in EU, Croatia Sees Strong Growth

ZAGREB, 4 May 2022 - Retail trade in the European Union and the euro area in March fell slightly reflecting a decrease in fuel sales whereas in Croatia it increased strongly, the latest Eurostat report released on Wednesday indicates.

In March, the seasonally adjusted volume of retail trade decreased by 0.2% in the EU and by 0.4% in the euro area compared with February, when it increased by 0.3% and 0.4% respectively.

The volume of retail trade in the EU and euro area dropped the most at petrol stations, by 3% and 2.9% respectively.

The retail sale of non-food products also decreased, by 0.7% in the EU and 1.2% in the euro area.

An increase in the volume of retail trade was reported only for food products, beverages and tobacco, of 0.6% in the EU and 0.8% in the euro area.

Among the Member States for which data are available, the highest increases were observed in Slovenia (+11.4%), Latvia (+11.1%), and Hungary (+7.3%).

Croatia registered a month-on-month increase in the volume of retail trade of 4.0%, the strongest increase since November 2020. In February it increased by 0.8%.

The largest monthly decreases in the total retail trade volume were registered in Spain (-4.0%), Luxembourg (-3.3%) and France (-1.9%).

The highest year-on-year increases in the total retail trade volume were registered in Slovenia (+25.6%), Estonia (+18.4%) and Malta (+16.4%).

The largest decreases were observed in Denmark (-11.0%), Spain (-4.8%), and Belgium (-3.9%).

The volume of retail trade in Croatia in March increased by 5.5% year on year after a 0.7% decrease in February.

Romania registered a similar increase in the volume of retail trade, of 5.4%.

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

Wednesday, 9 March 2022

Croatian GDP Growth Among Strongest in EU at End of 2021

March the 9th, 2022 - Croatian GDP growth in the fourth quarter of last year is more than impressive, placing the country among the European Union (EU) member states with the strongest such growth of all.

As Poslovni Dnevnik writes, the Republic of Croatia is among the EU countries with the highest annual GDP growth rate in the fourth quarter of 2021, ranking behind Ireland and Malta and soaring well above the European average, new Eurostat estimates revealed this week.

The EU's seasonally adjusted gross domestic product (GDP) rose 0.4 percent in the fourth quarter of 2021 compared to the previous three months, when it increased 2.2 percent, Eurostat confirmed in its February estimate.

The Eurozone's GDP grew 0.3 percent when compared to the third quarter, when it rose 2.3 percent.

Compared to the same period a year earlier, the seasonally adjusted GDP of the EU as a bloc and the Eurozone increased by 4.8 and 4.6 percent respectively. It rose 4.1 percent in the EU and 3.9 percent in the Eurozone in the previous quarter.

Activity in both the EU and the Eurozone exceeded pre-pandemic levels from back at the end of 2019, by 0.6 and 0.2 percent, respectively, Eurostat determined on the basis of seasonally adjusted data. Throughout 2021, activity in both areas rose 5.3 percent, 0.1 percentage point stronger than Eurostat estimated back in mid-February.

Neighbouring Slovenia is at the helm...

At the annual level, all EU countries form which Eurostat obtained data recorded GDP growth in the fourth quarter of 2021, and the strongest was in neighbouring Slovenia, where it amounted to 10.5 percent.

The Slovenes are followed by Malta and Ireland with a 10 percent increase in activity, and Croatian GDP growth also places it in this group, where it grew by 9.9 percent, after a 15.3 percent jump in the period from July to September. The weakest growth among the countries with Eurostat data was recorded by Slovakia, with 1.2 percent, and Germany is close with a growth rate of a mere 1.8 percent.

Among the countries whose data were available to Eurostat, GDP in Slovenia grew the most on a quarterly basis in the fourth quarter of last year, by 5.3 percent, followed by Malta with 2.3 percent growth and Spain and Hungary, where GDP grew by two percent in both countries.

A decline in activity was recorded in Ireland, by 5.4 percent, in Austria, by 1.5 percent. The same also fell slightly in Germany, by 0.3 percent, and here in Croatia, Latvia and Romania, that fall stood at 0.1 percent. In the third quarter of last year, Croatian GDP growth stood at 1.4 percent on a quarterly basis.

Decreased employment

The number of employees in the EU and the Eurozone increased by 0.5 percent in the last three months of last year compared to the summer quarter, when it increased by 0.9 and one percent, respectively. Compared to the end of 2020, it increased by 2.1 percent in the EU and by 2.2 percent in the Eurozone. Between July and September, it rose 2.1 percent in both areas.

Recovery in Croatia...

Employment in Hungary, Denmark, Malta and Spain accelerated the most on a quarterly basis, ranging from 1.2 to 1.0 percent. Here in Croatia, the number of employees increased by 0.6 percent in the fourth quarter of last year compared to the previous quarter, when it fell by 0.1 percent. On an annual basis, the number of employees in Ireland increased by the most, by 8.4 percent.

When it comes to the growth in the number of employees at the end of last year by 3.6 percent compared to the same period back in 2020, Croatia is equal to Greece, Luxembourg and Malta. In the third quarter, the number of employees in Croatia increased by 1.7 percent on an annual basis. Only Romania saw a 9.1 percent drop in registered employee numbers.

For more, check out our lifestyle section.

Friday, 4 March 2022

Foreign Exchange Intervention: Croatian National Bank Sells €171 Million

March the 4th, 2022 - The Croatian National Bank (CNB/HNB) has sold a massive 171 million euros to various banks in a recent exchange rate intervention, the first which has taken place since back in June last year.

As Jadranka Dozan/Poslovni Dnevnik writes, on the 2nd of March, the Croatian National Bank intervened in regard to the exchange rate by selling off foreign exchange to banks in order to preserve the stability of the exchange rate, while 171 million euros were sold to banks at an average exchange rate of 7.562505, the central bank announced.

As a result of this foreign exchange intervention, which has obviously been primarily driven by increased demand for foreign exchange, about 1.3 billion kuna is being withdrawn from the system.

After the opening of that day's trading, the market exchange rate of the euro/kuna stood at 7.58, which is slightly higher than it had been. In the daily reviews of leading banks on the Croatian foreign exchange market, it could be read that on Tuesday this week, there was a slightly higher demand for euros by corporate clients for foreign currency payments, but in the past few days, a slightly higher demand was attributed primarily to the retail sector.

As briefly touched on, the Croatian National Bank last intervened in the foreign exchange market back in mid-June of last year, but then it was by buying foreign exchange from banks as a result of increasing appreciation pressures, while the last time it intervened by specifically selling off euros was in the first half of April 2021.

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

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