The Russian invasion of Ukraine and the sanctions imposed on Russia by the European Union and the USA due to it have increasingly tangible repercussions and are beginning to pose a new threat to economies that are still recovering from pandemic shocks. The prices of a range of key industrial inputs and basic food products have exploded, and this is after the inflation rate was already extremely concerning, threatening shortages and reductions, and all companies doing business with Russia are facing significant problems, which is more than enough reason to talk to the head of the Croatian Employers’ Association.
Despite the increasingly gloomy mood among analysts and deteriorating economic forecasts, Damir Zorić remains, perhaps surprisingly, optimistic. He does not expect a recession or shortages, nor does he believe there will be problems with the introduction of the euro, which will most likely happen at the beginning of next year, although he acknowledges that the pain of sanctions is being felt by the domestic economy, as well as that the government cannot do much to mitigate their negative effects. He is convinced that growth will continue this year, which he supports with the high demand for labor in the domestic market, but also with a noticeably different atmosphere in the Croatian economy. As he summarizes, people used to come to HUP mostly to complain, now they come mainly with development plans.
How is the Croatian economy coping with the situation in Ukraine and which sectors are most affected?
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— – It is impossible to calculate the damage now because we do not know when the war in Ukraine will stop. Certainly, damage exists and will be greater the longer the invasion lasts. Exports, imports, and companies owned by Russians are affected, and solutions to their problems will have to be sought at the level of the European Union because it is difficult for us to do anything independently. Perhaps companies operating in that area can manage by finding other markets, but even there, a political agreement at the EU level will be needed because some product surpluses may arise, for example. When it comes to imports, we are primarily talking about energy sources, about which Europe is trying to reduce dependence through various strategies, but this cannot be realized overnight, and until that happens, that sector will suffer damage, as will other related sectors. When it comes to companies owned by Russian oligarchs, it is necessary to separate the management and operation of those companies from the owners. That property is in Croatia, and Croatian workers are employed in those companies who are unjustly suffering, which is why I think these are the worst-conceived sanctions. Therefore, it is necessary to separate the company from ownership, and we cannot do that ourselves in Croatia; these sanctions need to be modified as such. There should be no difference between Đuro Đaković and Chelsea Football Club, yet Chelsea plays, while Đuro Đaković faces ‘relegation’ and is not the only one of our companies with this problem. It is wrong to take the stance that exports to Russia do not represent a significant problem because they account for barely two percent of total exports. For the companies that make up that percentage, it is a lot, even their entire business. The same applies to imports because it concerns energy sources and affects everyone.
