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EBRD affirms Croatia's 2019 GDP growth forecast at 2.5%

EBRD affirms Croatia's 2019 GDP growth forecast at 2.5% Author: Radomir Ralev

ZAGREB (Croatia), May 8 (SeeNews) - The European Bank for Reconstruction and Development (EBRD) affirmed on Wednesday its November forecast for Croatia's 2019 economic growth at 2.5%, considering the country's stronger tourism revenues and faster EU funds absorption.

"Risks to the projection are relatively balanced. On the upside there is a chance of another improvement of the tourism revenues and faster utilisation of the EU funds", the EBRD said in its latest Regional Economic Prospects report.

It warned that any spillovers from ailing food and retail giant Agrokor could have negative impact on the economic growth. "[...] although risks related to the latter have decreased following the debt settlement reached in 2018."

Croatia's economic expansion moderated to 2.9% in 2017 and 2.6% in 2018 from the post-recession high of 3.5% in 2016.

The EBRD report noted that private consumption remained the main growth driver last year, fuelled by increased earnings, higher employment and stronger household lending. "However, higher private consumption led to increased imports, and as exports did not increase by as much, the negative contribution from net exports was higher in 2018 compared to the years before."

Investment has been contributing almost 1pp to Croatia's growth every year since 2015, thanks to its 4-5% annual growth rates, as economic sentiment kept on rising. In addition, S&P’s upgrade to BBB- in March 2019 put Croatia back to investment grade, the EBRD said.

The EBRD also said it expects the Croatian economy to expand by 2.5% in 2020.

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