The rating agency Standard & Poor’s has confirmed Croatia’s long-term ‘BBB’ and short-term ‘A-3’ credit ratings, with negative outlooks. The assessment is based on a relatively high gross domestic product (GDP) per capita, the stabilization policy of Croatian monetary authorities, and reforms related to EU accession, according to the statement.
Among the weaknesses are the high indebtedness of the private sector, slow structural reforms to increase competitiveness and the fiscal system, as well as significant dependence of the economy on the tourism sector. Despite some pressures, the Croatian National Bank has effectively responded to preserve the exchange rate of the kuna against the euro, aided by significant foreign exchange reserves, but the financial system and the overall economy remain vulnerable, the statement says. After a GDP decline of 6 percent in 2009, Standard & Poor’s expects negative GDP in 2010, which, it is stated, will further hinder Croatia’s efforts to reach the EU average. (H)
