The Croatian economy is expected to grow by three percent this year, stronger than previous estimates from last autumn and significantly higher than the eurozone average, according to the International Monetary Fund (IMF) in its regular spring report published on Tuesday.
In October last year, the IMF projected a growth rate of 2.6 percent for Croatia in its regular autumn forecasts for the global economy for 2024. For 2025, the Croatian economy is expected to grow by 2.7 percent according to their forecasts.
They have lowered the inflation estimate for this year from 4.2 percent predicted in October to 3.7 percent. Next year, they expect a significant slowdown in price growth to 2.2 percent.
They have significantly changed the estimate of the current account balance for this year and now expect it to show a surplus of 1.5 percent. Last autumn, they had predicted a deficit of 0.4 percent. For 2025, they also forecast a surplus in the current account balance of 0.9 percent.
They have slightly lowered the unemployment rate estimate for this year by 0.1 percentage points to 5.8 percent. Next year, it is expected to decrease to 5.5 percent according to their calculations.
Weak Growth in the Eurozone
The eurozone economy is expected to grow by only 0.8 percent this year, according to the IMF, which has lowered its January forecast by 0.1 percentage points.
The IMF publishes only forecasts for the global economy and for major economies and regions in its winter report. Next year, activity in the area of the common European currency is expected to grow by 1.5 percent according to their new calculations, which is 0.2 percentage points weaker than the winter projections.
Among the ‘large’ economies in the eurozone, the IMF forecasts the highest growth for Spain in its latest projections, at a rate of 1.9 percent, even stronger than predicted at the beginning of the year.
For the French and Italian economies, they now forecast growth of 0.7 percent each, slightly weaker than expected in January. They have also lowered the estimate for this year’s growth in Germany, the largest economy, from 0.5 to just 0.2 percent.
The new IMF calculations show that inflation in the 20-member economy is expected to slow to 2.4 percent this year, down from 5.4 percent in 2023. In 2025, price growth is expected to further slow to 2.1 percent, approaching the two percent level targeted by the European Central Bank.
The IMF emphasizes that growth in the eurozone will recover, but from very low levels, warning that activity is hampered by shocks from the previous period and strict monetary policy. To curb inflation, the ECB raised interest rates in the eurozone by 4.5 percentage points from July 2022 to September 2023.
