Of the 11 criteria for assessing macroeconomic imbalances, Croatia exceeds 3

Of the 11 criteria for assessing macroeconomic imbalances, Croatia in 2011 exceeds the reference values for three indicators – the balance of international investments, changes in the share of world exports of goods and services, and the unemployment rate, according to HNB data.

These are a total of eleven indicators that, in combination with the set indicative thresholds, serve as an early warning of the existence of certain imbalances.

If the existence of macroeconomic imbalances is established in a member state, or if it is concluded that there is a significant risk of them, the European Commission will conduct a thorough analysis of that country’s economy and recommend measures for correction.

Croatia will certainly be ‘under scrutiny’ by the European Commission in 2013 regarding the budget and all other matters, according to HNB, noting that this year the state budget for 2013 is the last one that Croatia will adopt completely independently, as future budgets will have to be sent to the European Commission.

Although Croatia is not covered by the alert mechanism report, HNB in its latest information on economic trends and forecasts provides indicators for EU members and comparable indicators for Croatia.

According to these indicators, in Croatia in 2011, out of a total of 11 indicators, the reference values were exceeded for three indicators – the state of international investments, the share in world exports, and the unemployment rate (the three-year average reference value is 10 percent, while for Croatia it is 11.4 percent).

Regarding the state of international investments, Croatia, like most new members, has an exceptionally high negative balance, even significantly higher than the average of that group, HNB states.

Croatia also exceeds the reference value for the unemployment rate, and the central bank notes that this trend is likely to continue in the coming years.

In terms of export competitiveness, Croatia stands out from the group of new member states that are increasing their share, while Croatia records a loss of export share of nearly 18 percent in the previous five-year period.

– It is very likely that in the next Alert Mechanism Report, Croatia will be identified as a country with potential macroeconomic imbalances and high vulnerabilities, for which the European Commission will conduct a detailed analysis and prepare possible recommendations for their correction. Even before such expected recommendations, it is evident that Croatia needs to implement economic policy measures aimed at increasing competitiveness and flexibility in the labor market, as well as consolidating public finances, along with all other measures that could increase potential growth, HNB emphasizes, noting that Croatia, until it joins the EU, will receive non-binding recommendations, and after joining the EU, the recommendations will be binding.