Croatia is facing an extended recession in 2011. Therefore, the dismissed ministers could claim in a year or two that things were stable during their time, and when they had to leave – the state finances began to collapse.
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Written by: Miodrag Šajatović |
A weaker credit rating, warnings from abroad, foreign exchange interventions… these are minor tremors that very likely herald a more devastating shock in the national economy |
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The delayed moves of the HDZ continue. The party whose ministers were two years late in acknowledging that Croatia is in recession is now, with at least two years of delay, embarking on a government reconstruction. In globally dangerous times, a delay of several months is dramatic. Years of delay is equivalent to catastrophe. If it is true that ‘on the chopping block’ are Finance Minister Ivan Šuker and Health Minister, but more importantly, HDZ Vice President Darko Milinović, and that in addition to replacements for them, a new Deputy Prime Minister for Economy is being sought, one might think that things will start to change for the better after the dismissals. However, it is quite clear that changes ahead of a long electoral race will not help improve the economic and business climate in the country. Without a New Model What has been destroyed in his seven years is the foundation from which taxes for salaries and pensions are collected and that borrowing was done without measure and at usurious interest rates, the public with a short memory would not take into account. There would surely be those who would lament for ‘Šuker’s times’. Ignoring Minor Tremors And in the so-called real economy, the situation is dramatic. Analysts are disappointed that industrial production is falling at a rate greater than four percent despite contrary expectations. Only salon economists, who have not a single day of experience in a company and in a place where one needs to earn a salary in the market (and not live off a budget-secured salary), can believe that GDP will grow in Croatia next year. Salon economists cannot incorporate into their models what entrepreneurs and managers in Croatia have learned in the last two years. Many businessmen in 2008 and 2009 believed politicians and some analysts that the crisis was just about to pass. So they postponed adjustments to a prolonged recession. They did not cut costs enough, produced for warehouses, took expensive working loans. But they painfully learned the lesson. Now most are very cautious. They have pulled the handbrake and it is difficult to entice them into investments and development with cheap tricks and announcements. In the market jungle, there is a struggle for mere survival. Many are on the brink of business failure and will not be able to fill the budget as the government envisioned. |
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