Friday, 26 November 2021

Strong GDP Growth in Q3 Increases Forecasts for All of 2021

ZAGREB, 26 Nov 2021 - The 15.8% GDP increase in Q3 has prompted RBA analysts to review their growth forecast for 2021 of 7%, the Chamber of Commerce says Croatia could be among the fastest-growing EU economies in 2021, 2022 and 2023, while employers note growth at the end of 2021 will be just a little higher than it was 10 years ago.

The State Bureau of Statistics (DZS) on Friday released its first estimate of GDP growth in the third quarter of the year, under which it is 15.8% higher than in Q3 2020.

That is the second-largest jump in economic activity after a record growth of 16.5% in Q2.

HGK: GDP growth in three quarters as much as 10.7%

Considering the good results in Q2 and Q3, in the first three quarters of the year GDP went up by as much as 10.7% compared to the same period of 2020, the Croatian Chamber of Commerce (HGK) said in its analysis of the latest DZS data.

Real GDP was not only significantly higher than in 2020 but it even exceeded the 2019 GDP by about 1.5%, putting Croatia among the most successful EU countries for which data is available.

"Of a total of 21 member states for which Eurostat has data for all three quarters, only ten achieved a GDP that was higher than in 2019. Compared to other member states, Croatia also stands out for the growth rate, having achieved the highest growth," the HGK said.

According to the European Commission, with an average GDP growth of 5.7% in this and in the next two years Croatia could rank third among EU countries, behind Ireland and Romania, and its growth is expected to be more dynamic than that of the entire EU, which will enable it to get closer to the EU development average.

HUP: GDP at end 2021 just a little higher than it was a decade ago

The Croatian Employers' Association (HUP) underscored that based on available indicators, the DZS's initial estimate confirms the double-digit growth rate of real GDP in the third quarter of this year as against the same period last year, however, it noted that  at the end of 2021, GDP would be just a little higher than the growth achieved more than a decade ago.

HUP notes that based on most economic indicators, Croatia continues to be at the bottom of the EU along with Bulgaria.

"In order to change that and for growth to be stepped up and the level of development of other EU members from central and eastern Europe to be achieved, we need to use the present time to create foundations for strong and sustainable growth rates in the future," HUP underscored.

Joining the euro area and accessing EU funds "could additionally push growth rates up in the coming period but exclusively on the condition reforms are implemented to enable investments and new employment."

For more on business, CLICK HERE.

Sunday, 3 October 2021

Croatian Economic Indicators Looking Positive, CNB at 8.5%

October the 3rd, 2021 - Croatian economic indicators that have been arriving over more recent months have been well and truly "trampling" on some recent forecasts on the pace of economic recovery, ie this year's GDP growth.

As Poslovni Dnevnik/Jadranka Dozan writes, only a few months ago, the Croatian National Bank revised the growth estimate upwards (to 6.2 percent), and now they're calculating that Croatian GDP growth rate will reach 8.5 percent this year. The latest projection was made by Governor Boris Vujcic at the Financial Market conference held in Opatija.

This is primarily based on the expected results of tourism, from which revenues, instead of the recent projections of 70 percent of those from pre-pandemic 2019, should reach as much as 90 percent. The CNB now calculates that the GDP growth rate will reach 8.5 percent this year.

Expectations from exports...

In addition to tourism and consumption, more rapid growth in 2021 than expected is also suggested by trends in merchandise exports, but in parallel with such dynamics of recovery after a sharp decline in 2020, expectations for next year are declining. The CNB now sees it at 4.1 percent in 2022, with, as the governor says, the risks associated with the pandemic and inflation, ie disruptions in supply chains.

However, indications of the return of production from Asia to the west may be an opportunity for part of that production to move to Croatia, according to the central bank. In any case, this year's Croatian economic indicators turned out to be closer to the forecasts of a number of foreign banking groups and think tanks whose GDP growth forecasts from a few months ago (of seven, eight percent or more) seemed too optimistic until quite recently.

The latest set of data that arrived from the Central Bureau of Statistics - on industrial production, retail trade and trade in services - is on the trail of a faster pace of recovery than originally expected. Thus, according to the CBS, the volume of industrial production back in August was 5.2 percent higher than it was back during the same month last year.

After 2020, in which the coronavirus crisis was reflected in a drop in production of 3.4 percent, it is the ninth consecutive month of growth on an annual basis. The annual growth rate of production in August accelerated when compared to July (3.9 percent), and if the period from the beginning of the year to the end of the eighth month is observed, production now stands at 8.3 percent higher than it did last year.

When it comes to year-on-year comparisons in August, the production of so-called intermediate goods, there was an increase of almost ten percent when compared to August last year, and a solid 6.6 percent was also recorded in terms of capital goods. When it comes to non-durable consumer goods, the increase in production was more moderate (3.5 and 1.5 percent), while the decline, by four percent, was recorded only in the category of durable consumer goods.

In addition to the effect of the base period, and with the continued strengthening of both Croatian and foreign demand, the industry has seen a slow increase in the number of insured people, according to HZMO data, which encourages positive expectations, Raiffeisen Bank analysts said in a flash review of the latest figures on industrial production.

The impact of the base effect has long followed the comments of various other Croatian economic indicators. It is also partly responsible for the latest annual retail sales growth rates. Back in August, retail consumption increased by 18.3 percent year on year.

In addition to the mentioned base effect, such double-digit growth is a consequence of more favourable trends in tourism, and it was certainly contributed to by, as they say from RBA, "moderately positive trends on the labour market."

August was the seventh month of consecutive (annual) growth in terms of Croatian consumption, and this series was preceded by 11 months of decline under the influence of the coronavirus crisis.

Double-digit growth rates

As with industry, retail sales in August saw accelerated growth year-on-year when compared to July when retail sales rose by 12.8 percent.

The growth of retail turnover in the retail trade of food, beverages and tobacco products exceeded 15 percent, while turnover from trade in non-food products (except trade in motor fuels and lubricants) recorded a stronger jump, only slightly less than 20 percent annually.

Cumulatively, from the beginning of the year to the end of August, retail trade recorded a 13.5 percent increase in turnover compared to the same period last year. Over the past year, retail sales fell by 5.8 percent in real terms.

The data from the Tax Administration on fiscalised receipts for the month of September signal the fact the next monthly announcement of the CBS on trade turnover will be in the form of a double-digit growth rate, although this data will also reflect this year's strengthening of inflationary pressures.

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

Wednesday, 22 September 2021

Equality of the Sexes Can Increase Croatia's GDP by €4bn a year - McKinsey Analysis

ZAGREB, 22 Sept, 2021 - If it steps up efforts to reduce the gap between the sexes and uses the potential of the female population, Croatia could increase its Gross Domestic Product (GDP) by €4 billion a year by 2030, shows an analysis by the McKinsey & Company consultancy, released on Wednesday.

A Winning Combination: How empowering women can benefit central and eastern Europe (CEE), is the title of an analysis studying the presence of women in the cooperate sector in the Czech Republic, Croatia, Hungary, Poland, Romania, Slovakia and Ukraine.

Women account for 52% of the population in those countries and more than 60% have university education. Despite that, they account for only 45% of the total workforce, McKinsey's analysis notes, adding that by increasing the equality of the sexes, central and eastern Europe could unlock €146 billion in GDP a year until 2030, which is roughly the amount of Croatia and Slovakia's GDP combined.

Three key factors for that would be increasing the participation of women in the total workforce, increasing paid hours for women and better representation of women in high-productivity sectors.

Increasing women's participation to help curb labour shortage

A partner at McKinsey & Company, Marta Matecsa, underscored that more women participating in the workforce would significantly help resolve labour shortages. Currently, the CEE has 630,000 job vacancies.

If the region reinstates its pre-pandemic growth rate, the number of job vacancies could increase to more than 2 million by 2030, said Matecsa.

Women hold only 8% of director positions

McKinsey's analysis shows that women account for more than 60% of graduate students in the CEE and as much as 37% of all managers - a share that is larger in comparison to Western Europe and even Nordic countries.

Nonetheless, women account for only about 20% of executive positions and only 8% of director positions. As many as 44% of the leading companies in the CEE do not have even one woman in that role.

In 2012 the share of women in management in CEE was 14%, just one percentage point behind Nordic countries and five percentage points ahead of Western Europe. Eight years later, the gap between the CEE and Nordic countries increased six-fold while the gap between Western Europe and the CEE was reduced to just three percentage points, McKinsey reported.

McKinsey added that a correlation existed between the portion of women in management positions and better financial results in companies.

Pandemic worsens balance between private and business life

The analysis shows that the COVID-19 pandemic has further worsened the balance between business and private life and even though both women and men now spend more time on household chores and unpaid care, more than 40% of female respondents said that the pandemic has significantly contributed to them considering reducing paid work or working hours and transferring to less demanding jobs or even leaving the workforce.

The analysis shows that 54% of women with children under 10 are actually considering just that.

For more about politics in Croatia, follow TCN's dedicated page.

Thursday, 2 September 2021

FinMin Says GDP Could Grow By 7% This Year

ZAGREB, 2 Sept 2021 - The latest macroeconomic trends indicate the upward revision of forecasts of the growth for this year and we now can expect a 7% rise on the year, Finance Minister Zdravko Marić said on Thursday.

He recalled that the government's current forecast is five percent.

Marić said that tax revenue from 1 January to 31 August was 0.7% higher than fin the corresponding period last year while VAT was over four percent more year on year.

YTD profit tax is a little lower as against the same period last year, but that was to be expected given that that is calculated based on the results in 2020. Contributions for pension insurance were 4% higher and that is on track with what we expected, he said.

The only levy that is mildly staggering is for automobiles which he explained by the reduction in some levies and global stagnation in the automobile industry.

As far as budget revenue is concerned, in August alone the value of fiscalised receipts was almost 21% higher than they were in August 2020.

He underscored a key role of the expenditure side for the sustainability of public finances.

Asked by the press about possible inflation in autumn particularly regarding food prices, Marić said that the latest data calls for caution.

According to the latest information from the national statistical office (DZS), inflation in July amounted to 2.8% on the year, the highest rate since April 2013. Consumer prices are fuelled by industrial producer prices which in July rose by 7.9% on the year, the biggest jump since April 2011.

Marić said that inflation was to be expected given monetary concessions on the global level and the amount of money released in the system which resulted in a drop in its price which then impacted inflation pressure.

He added that he isn't sure that the price hike on food and construction material can be entirely attributed to global trends and disruptions in the supply chain.

He warned there are very few prices that can be regulated as they are mostly regulated by the market and that market development and competitiveness are a must.

He recalled that when VAT was reduced on eggs, fresh meat, fish, fruit, and vegetables, tax policies had a limited impact because even after VAT was reduced the price of these products did not decrease significantly.

He mentioned the recurring rise in the debt by hospitals and that payment deadlines are now about 180 days for hospitals, 200 days for pharmacies and that the health insurance fund had transferred about HRK 5.9 billion to settle liabilities.

For more on politics, follow TCN's dedicated page.

Sunday, 18 July 2021

HNB Governor: Croatia's Q2 GDP Growth Rate Likely to Be About 18%

ZAGREB, 18 July, 2021 - The Croatian National Bank (HNB) Governor, Boris Vujčić, said on Sunday that Croatia's economy would likely reach a growth rate of about 18% in the second quarter of 2021, which was partly due to the low base in the Q2 2020 when the country had experienced a strong downturn.

Vujčić told the press in Dubrovnik where he had formally opened the 27th international economic conference, that Croatia's economic activity for the whole of 2021 would likely rebound at a rate of 6.8%, however, the epidemiological situation caused by the COVID pandemic still created uncertainties.

Vujčić explained that in the worst-case scenario, the GDP could rise by 4.8% in 2021.

The governor underscored a significant role of the government that provided job-retention grants which helped save jobs and made it possible for the recovery to be faster.

The crisis has made the ongoing digitisation processes faster, prompting remote working. I expect a large number of people to go back to work sites. Only after all things go back to normal, we will be provided with the real picture regarding the labour market that has behaved during the pandemic differently than during the big financial crisis in 2009 and 2010. In Croatia, we have already reached the 2019 levels in terms of employment figures and we are now faced with the recurring problem of shortage of skilled workforce, he said.

Commenting on the European Union's Next Generation plan, he said that that would be crucial for the economic recovery in the medium term.

In the next two years, the maximum of available funds will be tapped, and this amount of the funds withdrawn from the EU will have a positive impact on Croatia's GDP, according to his explanation.

The 27th Dubrovnik Economic Conference brought together about 70 experts and researchers from abroad and Croatia as well as representatives of financial institutions, central banks and the financial sector.

Some of the topics on the agenda of the conference are the further strengthening of the role of the state, particularly through the EU Next Generation programme, exchange mechanisms, corporate bankruptcies and so on.

For more on business in Croatia, follow TCN's dedicated page.

For more about Croatia, CLICK HERE.

Saturday, 17 July 2021

Foreign Analysts More Optimistic About Croatian Economic Picture

July the 17th, 2021 - Foreign analysts appear to be much more optimistic when looking at the Croatian economic picture and subsequent economic recovery. 

As Poslovni Dnevnik/Jadranka Dozan writes, it isn't that there is absolutely no explanation for the prevailing impression of the suppression of optimism among the Croatian public, but there have been some shifts.

When it comes to Croatian economic picture and the prospects, and despite the still present uncertainties about the pandemic, news that already looks like a wave optimism has appeared. The last in the series, from the Northern European powerhouse Great Britain, made the Croatian tourism sector especially happy.

Croatia will no longer be on the UK's amber list, but instead it will find itself on the green list. This significantly facilitates the return of British tourists after holidaying here, which is positive for the tourist season. However, recently the Croatian coast changed its colour from green to orange on the "Covid map" of the ECDC. It's therefore a mixed bag.

At the session of the two Councils on Wednesday, the Croatian National Bank issued a revision of the projection of real Croatian GDP growth in 2021. Compared to the original projected 5.9 percent growth, as part of the regular semi-annual review, it raised its growth projection for this year to 6.8 percent.

Although the European Commission in its summer forecasts a week ago improved the expectations of the growth rate (i) of the Croatian economy for 2021, in relation to the CNB's forecasts, the Commission now seems even conservative. The EC has raised its forecasts for this year from 5 to 5.4 percent.

Admittedly, this is primarily a correction that (as is the case with the CNB) largely reflects the assessment that the part of the recovery of the Croatian economic picture that was expected to materialise next year will actually move to 2021. As such, the EC now predicts a rate of 5.9 percent for next year instead of the recent forecast of 6 percent real growth.

Last week's summer forecasts from the Commission coincided with another positively intoned occasion when looking at the Croatian economic picture. EC President Ursula von der Leyen visited Zagreb and gave a positive assessment of the National Recovery and Resilience Plan, a document that forms the basis for European funding of projects worth billions of euros in the coming years.

However, in addition to the aforementioned wave of optimism, more forecasts of a number of international analytical and investment houses that don't have as much media visibility are also important.

For example, analysts at Moody’s Analytics recently updated their forecasts and are now counting on as much as 10.2 percent of GDP growth for Croatia. The Oxford Economics forecast is just under 9.9 percent.

Compared to most Croatian forecasters and institutions, the current forecasts of Croatian GDP growth are significantly higher according to Citigroup or Fitch Ratings, which see it at +8.5 percent this year. The same goes for the Dutch ING with their current forecast of eight percent, and Capital Economics with the expectation of 7.5 percent growth for the Croatian economy this year.

Coronavirus-related risks remain

Whether Croatian economists see better and more deeply, or they naturally shift their focus to economic weaknesses and risks, remains to be seen. In any case, all forecasts for the Croatian economic picture today are accompanied by reservations or remarks related to the risks of a possible unfavourable development of the epidemiological situation. For economies that, like Croatia, are strongly dependent on tourism or services that strongly imply social contacts, this is a much more sensitive variable.

In any case, in the Government, ie the Ministry of Finance, are officially sticking to the growth projections from a few months ago, and they stand at 5.2 percent.

For more, follow our lifestyle section.

Saturday, 10 July 2021

As Country Gets Hands on European Funds, How Will Croatian GDP Fare?

July the 10th, 2021 - Croatia has an enormous sum of money waiting to be utilised in various ways thanks to the European Union, but how will it do so? More importantly, what will be the effect on Croatian GDP?

As Poslovni Dnevnik writes, this plan which involves this EU cash should raise Croatian GDP growth by 1.5 percentage points in 2021 and by 2.5 to 2.9 percentage points in all years until 2026, including that final year, which is a huge boost following the coronavirus pandemic which left horrendous scars on the Croatian and European economies.

It should create 21,000 new jobs, too, and this is just an assessment of the direct impact of all the investments envisaged in the plan, not including the many reforms, which are an equally important part of the National Recovery and Resilience Plan. If Croatia manages to close the half of the gap with the European Union average with structural reforms, in the next 20 years, Croatian GDP would be as much as 15 percent higher than today.

These are just some of the figures that European Commission experts came up with when analysing and approving the much talked about Croatian NPOO. After the approval of the Croatian plan, Vecernji list found out about their thoughts and impressions from a high-ranking European official in Brussels.

It should not be forgotten, they added from the Belgian capital, that in addition to these 6.3 billion euros provided by the completely new fund from the mechanism for recovery and resilience, Croatia has about 9 billion euros at its disposal from the classic, structural EU funds.

''In front of you is a gigantic effort, you need to be able to manage and implement projects that will see all that money spent in a very short amount of time. You need to focus on that common challenge,'' said the official, who spoke only on the condition of anonymity.

After yesterday's green light from the European Commission, the EU Council has four weeks to adopt an implementing decision, which is a formal approval and allows for the payment of an advance of 13 percent of the value of the NPOO, which in the Croatian case totals about 819 million euros. In Brussels, everyone hopes that the Croatian plan will be approved by the Council before collective holidays begin during August.

For more, follow our politics section.

Tuesday, 8 June 2021

Eyes Focus on Season, But Croatian GDP Depends on Other Factor

June the 8th, 2021 - The tourist season is rapidly approaching and all eyes are firmly fixed on just what that will do for the domestic economy as the epidemiological situation at any given time continues to hold all the cards. With that being said, Croatian GDP depends on one other important factor, too.

As Poslovni Dnevnik/Ana Blaskovic writes, the announcement that the Croatian economy fell in the first quarter of 2021 by the least it has fallen since the beginning of the coronavirus crisis, more precisely by a mere 0.7%, was welcomed as an overture to recovery. In the turn towards the ''plus'' analysts' expectations of a significantly better performance remained firmly in the background. That means that the targeted 5.2 percent growth for 2021 (and all of the consequent revenue) will be a rather tight calculation that will focus not only on a good summer season but also peaceful autumn.

Most economists will say that it is difficult to forecast things for this year according to the first three quarters, even without the coronavirus pandemic, as Mystic Meg isn't around to do that job. Of the six analysts spoken to by Hina, three expected growth in the range of 0.7 and 4%, two expected stagnation, and one expected a decline of 6 percent.

"It's a bit hasty to come to conclusions based solely on the first quarter. Even with the data we have for the second, the picture is blurry because you have a base which is either too high or too low,'' explained Zeljko Lovrincevic from the Institute of Economics, emphasising that in the first three months of 2020, there were no coronavirus issues to really speak of, and the other three were marked by lockdowns.

"In the first six months, Croatian GDP growth is likely to be 3 to 3.5% annually. At this point, it's certain that the summer season could be good, and growth in the third quarter could reach 8-9%. With that being said, autumn remains uncertain and the last three months should have a similar dynamic to reach the planned 5.2% year-on-year. This will be possible only without an autumn wave of the virus and new restrictions,'' believes Lovrincevic, who is worried about the speed of the vaccination rollout. In order to curb the epidemic (and save the tourist season), the government has announced that 50-55% (out of 3.36 million) adults in Croatia will be vaccinated by the end of June.

23 days are left until June comes to an end, and according to the CNIPH, by June the 3rd, 1.317 million Croatian residents (39.1%) had been vaccinated with one dose, and 537,965 of them had received both, accounting for only 16% of adults. While the mass vaccination programme finally became operational after an amateur and frankly embarrassing start, a sharp drop in people being interested enough to get themselves registered for it has been noticed, meaning that the possibility of vaccinated people without the need for registration or an invitation is now a real and very likely possibility.

"Macro figures for this year are open due to the pandemic, but thanks to the relatively strong recovery of tourism, growth should be good in the 3rd and 4th quarters. Our expectations are a 5% increase in Croatian GDP in 2021 and 5.5% in 2022,'' says PBZ Croatia osiguranje macroeconomist Hrvoje Stojic, who forecasts a 4.5% budget deficit for 2021.

With a good tourist season, indicators for optimism are the growing share of exports of goods in Croatian GDP growth, stronger growth in investment and construction activities, European Union (EU) money and good indicators of personal consumption.

"If tourism surprises us and rises above our expectations, the forecasts could be adjusted upwards, so it makes more sense to talk about the direction in which the economy is moving than about the final speed of recovery, which can still vary," explained Stojic. RBA chief economist Zrinka Zivkovic Matijevic also points out that autumn is uncertain.

"There's a question of new strains, vaccinations, the duration of immunity… But I believe that, even if unfavourable scenarios come to be, Croatia will respond as before, with relatively mild measures and wouldn't just close shopping centres,'' she said, explaining this in terms of consumption and indirect taxes.

"It's not too easy to forecast, but we assume that the normalisation of movement will continue. That's why we remain with the forecast of 5.1% growth in 2021,'' she says.

The combination of the lower vaccination coverage of the population and the influx of millions of foreign tourists from countries with a diverse epidemiological picture, not to mention the confirmation of the Indian variant of coronavirus in Croatia, is understandably worrying.

Although Croatia is entering the summer with the first rebalance this year, the Minister of Finance announced the autumn reshuffling, counting on a clearer post-season picture.

With Croatian GDP projected, Zdravko Maric has a current target of 17.1 billion kuna (4.3% of Croatian GDP) of the central government deficit and 3.8% of the general government deficit.

This is a fragile balance on which a lot depends: the room for maneuver for measures to help the economy, the nation's credit rating, the implementation of the euro, all the way to the payment of salaries and pensions.

For more, follow our lifestyle section.

Thursday, 29 April 2021

Government Adopts Draft National Recovery and Resilience Plan, to Send it to European Commission

ZAGREB, 29 April, 2021 - The Croatian government on Thursday adopted the Draft National Recovery and Resilience Plan (NPOO) 2021-2027, worth HRK 49 billion, and it will send it to the European Commission for final harmonisation.

The document, which has more than 1,100 pages, contains descriptions of 77 reforms and 152 investments on which EU funds will be spent. It has five components and one initiative: the business sector, with investments amounting to HRK 26.2 billion or 54% of the total amount; public administration, justice and state assets (HRK 4.36 billion or 10%); education, science and research (HRK 7.5 billion or 15%); labour market and social protection (HRK 2.09 billion or 4%); health (HRK 2.56 billion or 5%); and the initiative "Reconstruction of buildings", with planned investments amounting to HRK 5.95 billion or 12% of the NPOO funding.

Sixty-six percent of the amount or HRK 32.15 billion is intended for recovery while 34% or HRK 16.5 billion is intended for resilience.

PM Andrej Plenković said the NPOO was a key document that "will enable us to use, in the next five years, more than HRK 47 billion for structural reforms and investments that will contribute to our economic recovery and make us more resilient to future crises."

If necessary, by the end of 2023 Croatia will also be able to seek loans in the amount of around €3.6 billion or HRK 27 billion, he said.

Economic recovery primarily refers to investments in those sectors that can guarantee fast economic growth in the short and long run, as well as job preservation and job creation, said Plenković.

Each component has 'digital' and 'green' elements, the goal being to reach the targets of 20% of investments being directed to digital transformation and 37% of investments being directed towards green transition.

Macroeconomic effects

According to projections, the NPOO's effects are expected to contribute to a real GDP growth in 2021 of 5.2% instead of 4.9% without the NPOO, while growth in 2022 would be 6.6% instead of 5.2% without the NPOO, and in 2023 it would be 4.1% instead of 2.7% without the NPOO. In 2024 the effects of the NPOO would result in a 3.4% economic growth instead of 2.5%, and in 2025 it would help achieve a 2.7% growth rate instead of 2.5%.

The government expects the implementation of the NPOO to cumulatively increase GDP by an additional 4.2% in 2025 in relation to 2020.

In the last year of its implementation, 2026, the NPOO will have resulted in GDP being close to HRK 17 billion higher than it would be without the NPOO.

Concrete examples of NPOO implementation

PM Plenković said that the implementation of the NPOO would make it possible to achieve the European target share of renewables in energy consumption (for Croatia the target is 36.6%) and achieving the European target of at least 14% of renewables in the transport sector until 2026. Investments in water management are planned as well to make drinking water available to around 93% of the population.

The plan also envisages better coverage with broadband infrastructure, access to fast internet for citizens and the business sector, and reduction of the number of outstanding cases at municipal courts by at least 5% by mid-2026.

The NPOO also envisages an increase in the share of children aged between 4 and school age who are covered by early preschool education, from 81% to 96%, which is the EU target.

Also envisaged are investments to create conditions to create as many jobs as possible for the sake of increasing the employment rate from 66.7% to 70% by the end of 2024.

"Labour market reforms and policies will help provide conditions to create at least 100,000 new jobs, with emphasis on people under 30 and the self-employed," said the PM.

Investment of HRK 2.5 billion in the health system is aimed, among other things, at raising the survival rate for cancer patients from 46 to 51% and saving around 5,000 lives. Also planned is the continuation of the functional integration of hospitals.

Post-earthquake reconstruction accounts for 12% of funds expected to be obtained under the NPOO, while the projected energy consumption for heating is expected to be reduced by at least 50% for buildings renovated as part of the NPOO.

Plenković said that in the next ten years and mostly in the first five, Croatia would have at its disposal close to €30 billion from EU funds. The amount is a unique opportunity to contribute to modernisation and growth of the business sector and Croatia's social and even development, he said.

For more about politics in Croatia, follow TCN's dedicated page.

Thursday, 22 April 2021

Central Bank Governor Boris Vujčić Says GDP Contracted By 7.8% in H1 2020

ZAGREB, 22 April, 2021 - As a consequence of the coronavirus pandemic and earthquakes real GDP in the first half of 2020 contracted by 7.8% year-on-year, due to a drop in personal consumption, investments and exports, while government spending rose mildly, Croatian National Bank Governor Boris Vujčić said on Thursday.

Vujčić said this in parliament while presenting the Croatian National Bank's (HNB) annual report on the financial situation and price and monetary policy stability in the first half of 2020.

He recalled that in the first half of 2020 a strong contraction of the global economy was recorded due to the spread of coronavirus and the introduction of restrictions. He added that the fall in real GDP in developed countries was the most pronounced during the peak of the spring pandemic wave.

Personal consumption contracted by 6.8% on the year, reflecting a decrease in available income due to negative trends on the labour market, a fall in the consumption of services whose provision of limited due to epidemiological restrictions as well as citizens' being less inclined to spend due to the need for physical distancing to avoid the risk of being infected and a decrease in consumer optimism. Those trends were also reflected in the lower indebtedness of the population, said Vujčić.

The annual inflation rate slowed down from 1.4% in December 2019 to -0.2% in June 2020 under the impact of the decreased prices of oil products, caused by the fall in global demand. The spread of the pandemic led to a decrease in inflationary pressure overall, notably in services related to tourism due to a significant drop in the number of passengers, and in durable consumer goods, due to a drop in investments. Basic inflation slowed down mildly from 1.2% in December 2019 to 1.1% in June 2020, which was mostly due to a drop in annual rates for individual food products and catering and accommodation services.

The contraction of economic activity due to the pandemic resulted in the import of goods falling at a significantly greater rate than exports, and the current and capital accounts in the first half of 2020 recorded a decrease in the deficit compared to the same period in 2019. On the other hand, the current and capital accounts were adversely affected by a significant drop in the net export of services, notably due to the situation in tourism.

HNB promptly adapted its monetary policies, using all the available measures with the aim of preserving the stability of the exchange rate and favourable conditions to finance citizens, the corporate sector and the state, said Vujčić. HNB sold a total of €2.7 billion to banks after which the kuna exchange rate was stabilised, he said.

Thanks to this and other measures kuna liquidity reached record levels and the state and private sector were able to continue taking loans with domestic banks under virtually the same terms as before the crisis, however, the weaker economic activity and demand for loans resulted in stricter terms to approve loans as a result of which consumer lending slowed down.

The budget deficit of HRK 13.2 billion in the first half of 2020 reflects the negative impact of the crisis caused by the pandemic on the economy and budget revenue. Temporary measures designed to relieve the consequences of the pandemic, such as the writing off of tax obligations and job-keeping support measures, also contributed to the fall in revenue. This is particularly obvious in the second quarter, when the deficit amounted to almost HRK 10 billion, HNB's report notes.

For more about politics in Croatia, follow TCN's dedicated page.

 

Page 2 of 5

Search