Elections May Force Milanović to Order GDP Growth in 2014

Another personnel misstep of the current Croatian government! They have appointed a new director of the State Bureau of Statistics. And what has Mr. Marko Krištof done? He has continued the practice of his predecessor Ivan Kovač.

Once again, the gross domestic product is in the negative. Director Krištof confirmed the previous estimate that GDP in the second quarter of 2013 fell by 0.7 percent compared to the same period last year. And he even dared to announce that the third quarter could also be in the negative. What does this man think?
Of course, the unfortunate directors of statistics are not to blame for the further decline in GDP. Given that Zoran Milanović’s government stubbornly refuses to question the belief that investments that ‘almost came’ will reverse the trend, it is hard to find any argument that the recession is over, even technically.
Since hope dies last, there may be at least a glimmer. This concerns the parliamentary elections, which are coming in two years.

Jurčić’s message from 2005. If any politician tells you that he primarily works for the common good, do not believe him – he is lying! Whether he wants to admit it or not, every politician, especially in these areas, does everything to maximize his electoral result in the next elections. Period!
This could provoke a change in thinking in the Banski dvori. While voters could be bought over the last twenty years through additional borrowing abroad, that tap is now closed. The Kukuriku coalition will find it difficult to buy votes with greater social rights and bribing the state administration and its household members in the next two years. Likewise, they will not be able to boast about reducing unemployment. It remains for statistics to show GDP growth. Some kind of growth.
And that could be achieved.
Before the outbreak of the crisis, around 2005, Ljubo Jurčić presented a thesis at a conference: ‘Growth is not hoped for, it is planned.’
This current government has refused to do so until now. There have been, it is true, sporadic attempts (Slavko Linić advocated that the government set a growth target of 1.8 percent for 2013), but they were unsuccessful. Everything has come down to hopes, expectations, and beliefs.
If Milanović and his closest associates have any desire to remain in power for another four years, then the most important thing for them should not be the European arrest warrant, but questioning how to raise GDP, even temporarily. After five years of decline, the base is so low that with the awakening of production in two or three factories and a bit more vigorous import substitution in two or three items, it could encourage director of statistics Krištof to report two consecutive quarters of GDP growth.
For example, if the fate of Dioki is resolved and production for export begins there, if import of petroleum derivatives from Slovakia is maximally substituted and electricity imports are reduced… With a few more moves, there you have GDP growth!

Do not look a gift horse in the mouth. Now someone will rightly ask what kind of advocacy this is for temporary and unsustainable growth. Unfortunately, for the battered real sector, the one that is still somewhat alive, it no longer matters how long the growth will last. What matters is that there is a respite. Even if just for a year. Let it be artificial, but only supermen can survive the sixth year in recession.
Of course, the assumption that wise state entrepreneurship (not the kind applied in the case of the Central Bank) will raise GDP also has a prerequisite – that activities in other components of GDP stop declining. And that will be difficult if there is an EU protectorate due to excessive deficit. But not impossible.
And there are solutions for healthy growth (after being provoked for the elections). To conclude this column, something we at Lider have been waiting for eight years – a state official who will sincerely reveal the potential of Croatian industry in exports. At the HBOR conference in Dubrovnik, the Deputy Minister of Foreign Affairs responsible for the economic diplomacy project, Joško Klisović, also stated:
‘In getting to know Croatian exporters better, I have dispelled the myth that is often circulated in Croatian diplomacy, but also in the public in general: that Croatia, a country with destroyed industry and weak financial capabilities, simply has nothing to produce and export. With great respect, I learn every day about what Croatian exporters are doing around the world… We must not underestimate our often top-notch knowledge, innovation, and ability to break into the global market.’