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Nov 30, 2007 13:25 EEST
ZAGREB (Croatia), November 30 (SeeNews) – Croatia's government said on Friday it has raised its inflation projections for the 2007-2010 period to reflect rising food and oil prices, and has lowered its forecast for the country's current account deficit in 2008-2010.
Inflation reached 2.6% in August, year on year, after extremely dry summer weather decimated crops in Croatia, pushing food prices higher.
"The risk of spillover of the growth of prices of farm products into various food products remains by the end of 2007, as food and beverages have a combined 30.5% share in the consumer price basket. The fluctuation of oil prices on world markets represents another risk to meeting inflation projections for 2007," the government said in a Pre-accession Economic Programme, a binding document for each European Union candidate country. Croatia started EU accession talks in October 2005 and hopes to join the bloc by the end of the decade.
A gradual fall in the current account deficit, from 8.1% projected for the current year to 6.5% in 2010, is based on expectations of rise in exports, tourism revenue and foreign direct investments.
"Projections show that crude oil prices on the world market will remain high, which will contribute to a rise in the value of imported oil and oil products, respectively to higher commodity imports," the government said.
Croatia's outgoing cabinet led by conservative HDZ party has to send its macroeconomic projections to Brussels by December. The next government can confirm or revise those forecasts. HDZ has a marginal lead over main opposition Social Democratic Party under partial results from Sunday's general elections released earlier this week.
The current government kept unchanged its forecasts for the real growth of the country's gross domestic product growth: 6.0% for this year, 6.1% for 2008, 6.5% for 2009 and 7.0% for 2010. Last year, Croatia's GDP grew by real 4.8%.
The previous government forecasts were made in August.
f = forecast; pf = previous forecast
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