The European Commission has upgraded Croatia’s economic growth forecast from 0.3% in May to 1.1% on Thursday…
The EC today released its forecasts for the next 2 years, with data on such things as GDP trends, inflation, employment, budgetary deficits and public debt. Despite significantly raising Croatia’s economic growth forecast, it still called on the government to implement structural reforms in order to stop public debt growth.
After being in recession the past 6 years, the Commission’s 3-year forecast predicts that Croatia’s economy will grow by 1.7% in 2017. This year the EC expects 1.1% GDP growth. A higher demand from the country’s main trading partners will be the main factor in the forecasted growth, the EC says. Exports are expected to grow 8.8% this year up from 6.3% last year.
Whilst Croatia’s economy is forecasted to grow by 1.1% this year, the European Union is set to grow 1.9%. Growth is predicted in all member states besides Greece. Ireland is forecast to record the highest growth this year of 6%.
“After six years of recession, Croatia’s economy is finally set to start growing again in 2015, by 1.1%, as the contraction in domestic demand comes to a halt and exports continue to grow buoyantly. Growth is forecast to accelerate and reach 1.7% in 2017, on the back of greater absorption of EU funds,” the Commission said, before adding.
“A good tourist season is set to contribute positively to GDP growth in the third quarter, but uncertainties ahead of the elections are likely to slow down activity towards the end of the year. Annual GDP growth in 2015 as a whole is expected to reach 1.1%,” the Commission said.
“The recent decision to convert CHF mortgage loans into euros is likely to have a minor positive impact on consumption, as households still face pressures to reduce their debt levels. Banks’ losses are set to result in an imputed negative flow of reinvested earnings… while a negative impact is expected on public finances”.