EC: Croatian Economy Grows, but Lags Behind Comparable Countries

The growth of the Croatian economy continues, although it is slowing slightly, but it remains slower than in comparable member countries, according to the spring economic forecasts published by the European Commission on Thursday.

The European Commission maintained its earlier estimates on Thursday that the growth of the Croatian economy this year will be 2.8 percent, and 2.7 percent next year, after growth somewhat faltered at the end of last year.

On the other hand, Slovenia’s GDP is expected to grow by 4.7 percent this year and 3.6 percent next year, Romania’s by 4.5 this year and 3.9 percent next year, Slovakia’s by 4 and 4.2 percent, Poland’s by 4.3 and 3.7 percent, Hungary’s by 4 and 3.2 percent, and Bulgaria’s by 3.8 and 3.7 percent.

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– It is positive that growth continues, albeit somewhat slower. However, the problem of Croatia lagging behind comparable countries remains, say experts in the European Commission responsible for Croatia.

– The solution to this lag is to increase the potential growth rate, which is achieved through structural reforms. These are easier to implement now that there is growth than when stagnation or recession occurs, the experts add.

In the Commission, relatively large employment growth, projected investment growth, and the general government budget balance, which is expected to be in surplus this year and next, are highlighted as positive developments.

The Commission estimates that Croatia will have a budget surplus of 0.7 percent of GDP this year, while last year it was 0.8 percent, which is also expected in 2019. This contributes to reducing the share of public debt in GDP, which represents one of the main macroeconomic imbalances.

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The Commission will publish economic recommendations for member countries on May 23. The Croatian government adopted the National Reform Plan and the Convergence Program on April 26.

Commission experts say that this year’s National Reform Plan may be somewhat less ambitious than last year’s, but they add that this is “perhaps good, because it is more important for us that reforms are implemented than that they are put on paper and not implemented.”

They emphasize that the Commission’s recommendations will be similar to last year’s and that they actually change little because they are not implemented in practice.