September 28 (SeeNews) - Croatia's economy is expected to expand by 6.5% this year, the European Bank for Reconstruction and Development (EBRD) said on Wednesday, sharply lifting its forecast for 3.0% growth made in May, but lowered its projection for next year.
“GDP growth is expected to reach 6.5% in 2022, but in 2023, weak Eurozone demand will likely contribute to a slowdown in growth to 2%,” the lender said in its September 2022 Regional Economic Prospects report.
The EBRD's previous forecast for Croatia's economic growth in 2023 was 3.5%.
The Croatian economy fully recovered from the pandemic in 2021 as GDP expanded by 10.2%, with private consumption, exports, and investment all recording robust contributions.
In the first half of 2022, GDP expanded by a still strong 7.4%, driven again by domestic demand and continued expansion of exports.
Croatia is relatively protected from the Russian gas import shutdown, given its majority state-owned energy sector, adequate share of renewables and access to alternatives through the Krk LNG terminal, the EBRD noted.
In September 2022, the Croatian government announced a package of support, amounting to 4.9% of 2021 GDP and focused on capping electricity prices until March 2023, tax reliefs and fuel excise tax cuts, energy subsidies to vulnerable households, and capping prices on basic foods, on top of earlier measures such as limited increases in gas and electricity tariffs and fuel price caps.
With consumption and investment weakening, the tourism sector will be key in supporting growth and budget inflows in the third quarter, the lender said. Tourist stays in June 2022 already exceeded those in June 2019.