Government: We Have Hit Bottom; HDZ: Without Structural Reforms, There Is No Recovery

Minister of Economy Ivan Vrdoljak assessed today that the slowing decline of GDP in the second quarter is a positive message, indicating that the bottom has been reached, while Minister of Tourism Darko Lorencin highlighted the positive contribution of tourism to GDP. HDZ Member of Parliament Domagoj Ivan Milošević believes that the decline in gross domestic product in the second quarter shows that the Croatian economy and budget are visibly collapsing.

“The recession has lasted too long, for the fifth consecutive year, our public sector is exhausted, and today we can send a positive message. The significant slowing of GDP decline is less than analysts’ forecasts,” Vrdoljak told reporters at the Ministry of Economy.

The State Bureau of Statistics today published the first estimate indicating that the gross domestic product in the second quarter of this year fell by 0.7 percent compared to the same period last year, which is a smaller decline than in the first quarter when GDP slid by 1.5 percent, and less than the 1 percent that analysts expected in a Hina survey.

Vrdoljak expects that in the third quarter GDP will be at least at zero, and in the last quarter, recessionary trends will end and a positive trend will begin. However, with what percentage, time will tell, he added.

He emphasized that consumption and all other indicators have stabilized, “which can send a message that we will not enter a new recessionary period, as happened in 2011 when Croatia was in the positive for one quarter, only to return to negative again.”

“This will not happen again; the numbers are more systematic, the statistics are different, and I believe this is the bottom that has been reached and that Croatia will move in a positive direction starting from the next quarter,” Vrdoljak said.

The slowing decline of GDP was likely influenced by tourism, assessed Minister of Tourism Darko Lorencin during the marking of the completion of the investment in Golf & Country Club Zagreb.

“The fact is that the financial indicators for the first seven months of this year are 6.6 percent better than last year,” said Lorencin, evaluating this year’s tourist season as successful.

“Data for August should show good tourist numbers, at the level of last year, and there are good forecasts for the post-season,” said Lorencin, emphasizing that they could exceed last year’s results if August and September remain at last year’s levels.

He added that tourism is a horizontal sector that connects with food, the creative industry, and construction, and announced that by the end of October, the first outlines of consumption in tourism will be prepared, and by January next year, a complete overview of the impact of tourism, i.e., tourist consumption by individual segments on GDP will be developed.

The Eurozone is showing signs of exiting the recession, and our economy is quite dependent on that market, says Lorencin, who believes that with the Eurozone’s exit from the recession, our economy will follow those indicators.

HDZ Member of Parliament and coordinator of the party committees for economy, finance, and energy Domagoj Ivan Milošević, predictably, views the latest data on the decline of GDP less optimistically.

Commenting on the statement by Deputy Prime Minister and Minister of Regional Development and EU Funds Branko Grčić that this decline was expected, Milošević asked how it could be expected when all government documents state that they expect an annual GDP growth of 0.7 percent, not a decline.

“For the government’s expectations to be realized, GDP growth by the end of the year would need to be over two percent, which is not possible,” he emphasized.

Reminding that HDZ has been continuously warning about the poor economic policy of the government for a year, Milošević said that it has been exclusively reduced to tax policy, which has led to dismal results.

He believes that, contrary to tax repression, tax relief is needed, but not just for one sector – tourism and hospitality. He also added that in the last six months, instead of discussing investments, there has only been talk of the cheap sale of state “silver and gold,” and he called on the government to publish a study on the feasibility of monetizing highways.

He stated that the government has not implemented a single structural reform in two years, especially in the area of public administration and state-owned enterprises.

Secretary of the HDZ Economic Committee Goran Soldo assessed it as concerning that GDP in Croatia has been declining for seven consecutive quarters.

“The poor result is a consequence of the bad and wrong direction of the government’s economic policy. Without any development strategy, the government has destroyed every economic activity and thus brought the budget into significant trouble,” said Soldo, emphasizing that the lack of investments has led to state finances being on the brink of collapse.