Croatia Country Report

The IntelliNews Croatia Country Report is a monthly report, covering the major macroeconomic indicators and trends in Croatia, as well as important political developments. Prepared by local analysts, it provides the most accurate data, updated regularly according to the data changes noted by the whole range of statistics sources. It will save the time you would need to track the figures and sources independently and will provide you with thorough analysis.

Croatia's statistics office released its GDP flash estimate, which showed an increase by a real 0.2% y/y in Q3, following a decline of 2.5% y/y in the previous quarter. The better GDP performance was likely driven by favourable development of exports. A macroeconomists' consensus forecast, announced shortly before that by news agency HINA showed that the market expected a GDP growth by a real 0.4% y/y in Q3. The EC also issued its autumn forecasts for the main macroeconomic indicators dynamics in Europe with its forecast for Croatia being for a GDP decline by a real 1.8% y/y in 2010 and an increase by 1.5% y/y in 2011. The projections worsened from the spring forecasts, when the economic drop was expected to reach 0.5% y/y in 2010. The EC said that industrial production, retail trade, and tourism revenues indicated that the recession bottomed out around mid-2010 and that a recovery has begun. Meanwhile, international credit rating agency Dun & Bradstreet (D&B) retained Croatia's DB3d credit rating, but changed its rating outlook to negative from stable. The outlook was changed due to the political uncertainty and instability, witnessed also in the latest popularity polls. D&B stressed that the coalition government was losing support, although it had not adopted economic austerity measures. The agency pointed out that the economy contracted for a sixth consecutive quarter, registering a 2.5% y/y drop in Q2/10 due to lower investments and consumption.

The parliament adopted the draft budget for 2011, based on projections for a full-year GDP growth of 1.5% y/y in 2011, which envisages a deficit of HRK 14.9bn (EUR 2.02bn) or 4.3% of GDP. The projected budget revenues stand at HRK 107.4bn and the expenditures - at HRK 122.3bn. The parliament also adopted the fiscal responsibility law, which envisages reduction of the general budget expenditures every year by 1pps of the projected full-year GDP in line with the government attempts to shrink the budget deficit. The law also stipulates that the government should also ensure that the planned budget expenditures will be fully covered by the revenues.

Table of Contents :

Executive Summary
Real Sector
Fiscal Policy
External Sector
Financial Intermediation

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