Macroeconomic forecasts and a review of the domestic capital market in the context of the global financial crisis were the main topics of the fifth annual conference of the Croatian Association of Corporate Treasurers, held this year in Osijek.
The GDP growth for this year was estimated by HNB Vice Governor Boris Vujčić at around 4 percent, while the chief economist of Hypo Alpe Adria Bank Hrvoje Stojić estimated it at 3.7 percent, noting that this year’s growth could be slightly lower and that next year it should reach 4.1 to 4.2 percent. Stojić warned that the global financial crisis could affect the availability of capital and thus slow down development and investments. The risk premium on Croatian stocks has significantly increased, which will negatively impact their valuations, especially in the construction sector, retail trade, and tourism. “The rapid profit growth that has so far driven stocks in emerging markets has reached its peak, and in the coming years we can expect a decline in the profitability of companies in those markets,” said Stojić.
Sectors with a medium-term investment horizon, according to Stojić, are defensive stocks with high dividend yields, the agricultural sector, certain construction companies active in the energy and transport investment cycle, and shipping companies with fleets for bulk cargo transport. What has most influenced the reduction of economic growth is the significant decline in personal consumption this year compared to 2007. The rise in inflation has led to a decrease in citizens’ purchasing power, and the psychological effect of the decline in stock values has also contributed to reduced consumption, making citizens feel increasingly impoverished. The current account deficit in Croatia is rising and is the largest among more developed transition countries, but it is covered by direct foreign investments, said Vujčić, adding that he expects the share of foreign debt in GDP to stabilize.
