The slowdown in growth across the region could affect the stagnation of reforms in transition countries. Although with almost the best rating for reform success, the EBRD believes that Croatia should focus this year on continuing privatization, improving the business climate, reforming the health and pension systems, and continuing negotiations for EU accession.
“This year we will increase our investments in Croatia by about twenty percent, and the focus of the European Bank for Reconstruction and Development will be on small and medium-sized enterprises that may face liquidity problems,” said the director of the EBRD office in Croatia during the presentation of the Transition report, a report on the progress of transition in the countries of Southeast Europe. Although Croatia is highly ranked for its progress in reforming its system, it faces numerous challenges in the crisis year of 2009.
The chief economist of the EBRD, Peter Sanfy, presenting the report with the intriguing title ‘Opportunities for Growth’, stated that this bank has revised GDP growth forecasts for all countries in the region. According to EBRD estimates, Croatia cannot expect growth in gross domestic product. “The slowdown will require some tough decisions from the state,” said Sanfy. In the continuation of the report, he praised the monetary authority and emphasized that the Croatian monetary system is the most stable in the region, which strengthens the belief that the economy should not face any significant difficulties for this reason. The EBRD’s recommendations are to continue reforms, especially in the judiciary and public administration, selective use of industrial policy, and continued privatization. It is also recommended to adopt such an industrial policy, i.e., to encourage those sectors that are easily adaptable to changes in business caused by the crisis.
