The Croatian economy is expected to grow by 2.9 percent this year and slightly slow down in 2018, according to the International Monetary Fund (IMF) in its latest forecasts released on Tuesday, also stating that the cyclical recovery of the economy at the global level presents an opportunity to distribute its fruits among citizens.
The IMF has confirmed its estimate of this year’s growth of the Croatian economy from April in its current report. In 2018, the Croatian economy is projected to grow by 2.7 percent, which raises the estimate from the April report by 0.1 percentage point.
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Last year, the Croatian economy grew by three percent, which also led the IMF to raise the April estimate by 0.1 percentage point.
The estimate of this year’s inflation in Croatia has been confirmed at 1.1 percent. Next year, price growth is expected to slightly accelerate to 1.2 percent, compared to the 1.1 percent that was projected according to the IMF’s April report.
Last year, consumer prices in Croatia fell by 1.1 percent, as estimated by the IMF in April. The estimates for the unemployment rate have also been confirmed, which is expected to be 13.9 percent this year and slide to 13.5 percent in 2018. Last year, according to confirmed estimates, it was 15.0 percent.
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The surplus in Croatia’s current account balance, expressed as a share of GDP, is expected to be 3.8 percent this year, which is an increase of one percentage point from the IMF’s April estimate.
The estimate for the surplus next year has been raised by 1.2 percentage points to 3.0 percent. Last year, the surplus was estimated by the IMF to be 2.6 percent, which is 1.3 percentage points lower than what was estimated in April.
Double the Stronger Growth of Emerging Economies
In the group of European emerging and developing economies, which the IMF has classified Croatia into, activities are expected to grow by an average of 4.5 percent this year and slow down to 3.5 percent in 2018.
The strongest growth in this group is expected in Romania, with a projected increase of 5.5 percent this year, slowing to 4.4 percent next year. Turkey follows with a projected growth of 5.1 percent this year, which is also expected to slow down in 2018 to 3.5 percent.
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In the broader group of market economies in emerging and developing countries, which includes European countries as well as the Commonwealth of Independent States (CIS), emerging and developing Asian economies, Latin America and the Caribbean, the Middle East, North Africa, Afghanistan and Pakistan, and sub-Saharan Africa, economic activities are expected to grow by 4.6 percent this year and accelerate to 4.9 percent in 2018.
Developed economies are expected to grow this year at half the rate of those in emerging and developing economies, by 2.2 percent, and next year their growth is expected to slow to two percent.
The U.S. economic growth is expected to follow the pace of the group of developed economies this year, but next year, activities in the largest economy in the world are expected to accelerate to 2.3 percent. This has led the IMF to raise its July estimates by 0.1 and 0.2 percentage points.
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The Eurozone economy is expected to grow by 2.1 percent this year and slightly slow down next year to 1.9 percent, which has led the IMF to raise its July interim estimates by 0.2 percentage points each.
Germany’s economy is expected to grow by two percent this year and 1.8 percent next year. France, on the other hand, is expected to show a reverse trend, with activities expected to accelerate next year to 1.8 percent, from an estimated 1.6 percent this year.
The IMF has also slightly raised its growth estimates for the global economy this year and next year. They now expect the economy to grow by 3.6 percent this year, which is 0.1 percentage point higher than what was estimated in July.
Next year, activities are expected to slightly accelerate to 3.7 percent, which is also 0.1 percentage point higher than what was estimated in July.
They warn that in the medium-term perspective, the risk of slowing activities still threatens.
“The growth of economic activities in the world is strengthening,” the IMF states, warning, however, that the recovery is not complete as “growth remains weak in many countries and inflation in the most developed economies is below the targeted level.”
“Therefore, the welcome cyclical acceleration of global activities provides an ideal opportunity to address key regulatory challenges, particularly raising potential GDP, while ensuring that its fruits are evenly distributed among citizens. It is also necessary to build resilience to risks that could weaken activities,” the IMF concludes.
