Croatia’s Economic Growth, Inflation To Slow Down Next Year, C/A Deficit To Fall – C-Bank

Croatia may expect its gross domestic product to rise by some 2.0% in 2009, slower than the real 3.3% growth projected for the current year and 5.6% last year, Rohatinski told a conference of Croatian exporters.

He expects average annual inflation to fall to 3.5% next year, from 6.2% forecast for this year. It was 2.9% last year.

The deficit in Croatia's current account will fall to 9.2% of GDP, from 10% of GDP projected for this year, said Rohatinski. The country's current account gap was equivalent to 8.6% of GDP last year. 
 
"This is not a thing that would make us happy but it also is not nearly as bad as in other countries and it [the crisis] can come here, too, if we fail to act in time," he said.

"In that case, even an agreement with the IMF probably will not be enough to prevent the country from entering stagnation or even recession," Rohatinski said.

Croatia’s current foreign debt of 37 billion euro ($47 billion), equivalent to 88.2% of GDP, is expected to reach some 38.5 billion euro or 89% of GDP next year, he added.  

The central bank has been pursuing tight monetary policy in the past few years, which is why the global financial crisis has not translated into a crisis of bank deposits or credits in Croatia so far.

In order to keep the financial resources of the nation, the central bank will ask the government to postpone the liberalization of capital flows that has been planned to take effect next year, Rohatinski said. 

($ = 0.7823 euro)