Business Expectations: Entrepreneurs More Optimistic Than Experts, Novotny Economic Analyst 2017.

Most entrepreneurs participating in the Privredni vjesnik and the Croatian Chamber of Commerce survey “Business Expectations for 2018” expect greater economic growth this year compared to last year, while analysts warn of a lack of reforms and stagnation.

In the Privredni vjesnik survey, representatives of 433 domestic companies rated the overall state of the economy for the past year with an average score of 2.77, reported Darko Buković, the editor-in-chief of Privredni vjesnik, at the presentation of the special edition “Business Expectations 2018.”

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For 59 percent of respondents, overall economic growth in 2018 compared to last year will be slightly higher, and 38.6 percent of respondents say they will resist any potential crisis by reorganizing their business. Almost half of the respondents (45.8 percent) believe that they will overcome any effects of the crisis, and more than two-thirds (70.7 percent) think that their company’s liquidity will remain the same as last year.

For about half of the respondents, the conditions for investing and doing business will remain the same as in 2017, but 37.3 percent believe they will improve slightly. 56.6 percent of respondents estimate that their total revenues will be slightly higher than last year, and 46.2 percent expect slightly higher profits.

Z. Marić: The Treasury is Filling According to Plan

Finance Minister Zdravko Marić stated that after the first month of 2018, there are no bad news for the budget. He said that, regarding revenue collection, everything is going according to plan, but changes in the car taxation system are already being felt.

“Reducing the tax burden will certainly have repercussions on a slight loss of tax revenues in the short term, but the dynamic component will largely recover that, and such messages are already coming from the market,” said Marić.

“In one year, we managed to reduce the risk premium on our bonds by 130 to 150 basis points, which is 1.3 to 1.5 percent of our total debt. Of course, we cannot immediately refinance our total debt of 290 billion kuna, but we can make a step forward. In the first quarter, the focus is on restructuring part of the debt of highways and roads,” said Marić.

For this year, he announced continuity in fiscal policy, based on the principle of spending as much as one has. He stated that the pressures to change this are very high, but he has managed to resist them so far.

“The situations when you have a deficit of 17 billion kuna and today when we are at zero or in a slight surplus are not the same. The reduction in interest rates we achieved on the reprogramming of the debts of highways, roads, and the state budget would not be as significant if we had come with a deficit of five or five and a half percent and only with a promise that it would happen,” said Marić.

He also believes that efforts should be made to increase productivity, which lags behind developed countries.

Damir Novotny Economic Analyst of the Year

Damir Novotny was declared the Economic Analyst of the Year at the event, receiving the traditional Gorazd Nikić award.

Novotny emphasized that in Croatia, apart from tourism, nothing structurally has changed in recent years. He pointed out that there is a lack of workers and top companies that would, for example, build the Pelješac Bridge, so it will be built by the Chinese, that the agricultural sector cannot cover tourist demand, and that an economic growth of two percent does not solve any structural problem.

“The prospects are not bright; we are entering a period of stagnation, and 2018 will be a reflection of 2017,” said Novotny.

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Economic analyst Željko Lovrinčević also believes that this year will be a reflection of the past, and that reforms are progressing slowly. He sees the introduction of the euro and entry into Schengen as two fundamental long-term state goals for which there are good assumptions.

Guste Santini called on Minister Marić to persist in further reforming the tax system. He believes it would be a success if this year’s economic result is repeated from last year, and he would not be surprised by more serious disruptions in the global market, similar to those from about ten years ago.

Zdeslav Šantić, like his colleagues, points out that the dynamics of economic growth are not good, and that major reforms are being avoided. Among other things, he advocates for reforms in the labor market, education, demographic measures, and would like to see the current year as a sign of greater structural changes.

Velimir Šonje believes that the government is not doing enough in the reform of the public sector, which would open space for other changes, while Mladen Vedriš wants to work on the quality of public services to reach the level needed for the economy.