Marić: The decline in GDP will be greater than during the greatest financial crisis in history

The Deputy Prime Minister and Minister of Finance Zdravko Marić stated on Wednesday that a greater decline in GDP is expected in the second quarter of this year than the largest recorded during the global financial crisis. A report from the Croatian Bureau of Statistics (DZS) on gross domestic product (GDP) for the second quarter is expected to be released on Friday, and in response to journalists’ questions ahead of the narrower cabinet meeting, Marić said that the quarterly decline is expected to be greater than that during the last financial crisis.

"As for how the whole year will look, expect the Government to come out with new projections sometime in the first or second week of September," announced Marić. The largest decline of 8.8 percent was recorded in the first quarter of 2009, at the beginning of the global financial crisis, and six analysts who participated in a Hina survey expect an average GDP decline of 13.9 percent year-on-year. This will be the first decline in the economy since mid-2014 and the largest since 2000, when the DZS began tracking these data.

Marić: Croatia fourth or fifth in terms of funds from the SURE program

Marić also told reporters that he believes everyone is aware of how generously the state has supported the economy through measures to preserve jobs, but that this cannot be done indefinitely. Concurrently, new programs are being opened, and just two days ago, the SURE program was approved, which will most likely finance the reduced working hours measure for employees, said Marić.

Let us recall that Croatia submitted a request to the Commission on August 6, in accordance with the SURE Regulation, for financing measures caused by the pandemic, which led to a sudden and serious increase in actual and planned expenditures directly related to subsidies for job preservation in sectors affected by Covid-19 and support for reduced working hours.

The first measure is one that ensures co-financing of employee wages for business entities that have a revenue decline of 20 percent in the period from March to May 2020 or 50 percent in June 2020, provided that the employment relationship does not cease. For March 2020, the amount of support was set at 3,250 kuna per employee with full-time employment, and for the months of April, May, and June 2020, the monthly amount of support was set at 4,000 kuna per employee with full-time employment.

The second measure provides support for temporary reductions in working hours between June and December 2020 for companies employing 10 or more employees, operating in any sector, provided that the employment relationship does not cease. The measure can support up to 2,000 kuna per month per employee.

Two days ago, the European Commission proposed to the European Council that a total of 81.4 billion euros in favorable loans be approved for job preservation in 15 EU countries, of which Croatia should receive one billion euros under the SURE instrument.

Marić notes that the amount received should be viewed in relation to the percentage of total GDP and the number of employees in each country, making Croatia fourth or fifth in terms of approved funds. He also adds that Croatia has performed even better regarding the European recovery plan, where it is at the very top in terms of allocated funds. "This is truly a great success for all those involved, especially the Prime Minister," assessed Marić.

Namely, Croatia will have 9.4 billion euros available from the new EU Next Generation instrument (NGEU), the recovery program for Europe from the coronavirus pandemic, of which just over 5.9 billion is in grants, and 2.35 billion are loans. However, Marić emphasizes that a significant challenge remains to draw as large an amount as possible as quickly and efficiently as possible.

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