Croatia Must Turn to the Production of Complex Products

At the annual economic conference, the second part of the program was marked by the president’s advisor Boris Cota and the chief economist of Splitska Bank, Zdeslav Šantić.

Boris Cota, special advisor to the president, particularly emphasized competitiveness as a major problem for the Croatian economy in his lecture. He specifically pointed out that despite pressures to reduce wages, this may not be the best economic move. On the contrary, he believes that Croatia must turn to the production of complex products, rather than simple ones, because in that area, even if wages are reduced, they would still not be competitive with cheap labor from the East.

– Croatia belongs to countries that export less complex products, and the problem is that many countries with cheaper labor produce them. Reducing wages will not solve the problem, but it will reduce consumption, said Cota.
He highlighted that everyone compares themselves to Germany, which is wrong because their export basket is completely different from ours. He assessed that government incentive measures will attract investors, but this will be sporadic.
– There is no increase in exports in the short term, and the investments coming will take time to show results. We must turn to complex products that have higher added value – believes Cota.

In his lecture, Šantić touched on economic growth in a similar way to the governor of the Croatian National Bank, Boris Vujčić. According to him, Croatia is a poor transitional student that has not implemented all reforms on time.
– Everyone came to copy our pension reform, but we stopped with it. Instead of continuing because we were on a better path. This has certainly affected the current situation – believes Šantić.

We have a long and complex road ahead of us, and we need to find a new model of economic growth. Joining the European Union will bring both good and bad things.
– In the short term, this will be a major challenge, but in the long term, we will only benefit from joining. Croatia is too small to survive on its own, and unification is the only reasonable decision we could make – emphasized Šantić.

In the end, he reflected on the future, and although it is uncertain to give some longer forecasts, he expects GDP growth of 1.5 percent in the medium term. Next year, the forecast differs from the government’s and the governor’s – he expects growth between zero and half a percent. The conference was closed by Damir Kuštrak, who presented Agrokor’s division for beverages and food.