April 5 (SeeNews) - Croatia's economic growth is expected to remain moderate at an average of 2.5% in the period from 2019 to 2021 due to a slowdown of exports, the World Bank said on Friday.
The trade balance could further deteriorate due to deceleration of foreign demand from main trading partners, as imports remain solid, while a better use of EU funds will give investment spending a boost, the World Bank said in an Economic Update for Europe and Central Asia.
Croatia's economy grew by an estimated 2.6% real in 2018, although
growth lost some of the momentum compared to the 2.9% increase in
2017, mainly as exports of goods and services decelerated.
The government finance is expected to be in average surplus of 0.4% of GDP in the period from 2019 to 2021, as it will lead to a further drop in public debt below 64% of GDP by the end of 2021, the World Bank said.
"The continued recovery of the economy, including a decline of the share of long-term unemployed and NEETs, is expected to contribute to the further decline in the absolute poverty rate measured at the $5.5 at PPP 2011 to 3.2% by 2021."
Risks are slightly tilted to the downside. Exports of goods are exposed to the risk of faster slowdown in external demand from the EU, since one of Croatia’s main trading partners, Italy, is expecting a slowdown of its economy.
In addition, exports of tourist services are expected to slow in the projection period, due to the capacity constraints.
Croatia's government debt is still high and subject to interest rate risk, as the country's current medium-term growth outlook is insufficient to accelerate the convergence with the EU, the World Bank said.