December 8 (SeeNews) - The deterioration of the epidemiological situation and the new measures to fight the Covid-19 spread could result in a close to 9% contraction of Croatia's economy this year, as compared to 8% projected earlier, central bank governor Boris Vujcic said.
"With the new wave of the epidemic and the accompanying new epidemiologic measures, I think that the change in the structure of consumption contributed to a decline of economic activity as compared to projections," Vujcic said in an interview to local news daily Jutarnji List. The text of the interview was published on the website of the Croatian central bank, HNB, on Monday.
Vujcic pointed out that the consumption of services produced locally that have a small import component has suffered more in the current situation than the consumption of goods with higher import component, adding that consumers somehow compensated the smaller consumption of services with bigger consumption of goods.
This is a unusual aspect of the crisis that is difficult to predict, he noted.
Vujcic said that the share of non-performing loans at domestic banks remained unchanged at 5.5% at the end of September compared to the beginning of 2020, adding that the non-performing loans of households have slightly increased, while the non-performing loans of businesses fell slightly, even though remaining considerably higher than those of households.
"Yet, despite of this, banks have started recognising the risks on incoming credits, therefore their impairment costs in the first nine months were almost four times higher compared to the same period of last year," Vujcic said.
In October, the Croatian central bank said it expects the domestic economy to shrink by 8% this year due to the the coronavirus pandemic and the related slump in tourism revenue, revising its July forecast for a 9.7% GDP drop. HNB also said that the economy will recover by growing 5.2% in 2021, slower than the July forecast for a 6.2% rise in GDP.
In November, the central bank said that the Croatian gross domestic product (GDP) contracted by a real 8.3% on the year in the first nine months of 2020.
Also in November, the European Commission said it expects Croatia's GDP to contract by 9.6% in 2020, revising its July projection for 10.8% annual drop. The Commission added it sees the economy growing by 5.7% in 2021 and by 3.7% in 2022.
In October, the International Monetary Fund (IMF) affirmed its forecast for Croatia's 2020 economic contraction at 9%, while upgrading next year's growth projection to 6.0% from the previously anticipated 4.9% rise in GDP.