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ZAGREB (Croatia), July 10 (SeeNews) - The European Commission said on Wednesday that it has increased its forecast for Croatia's economic growth in 2019 to 3.1% from 2.6% predicted in May, with domestic demand as the main growth driver.
Domestic demand remained the main driver of growth due to strengthening investment and robust household consumption, the European Commission said in its Summer 2019 Economic Forecast report.
Strong domestic demand should continue acting as the main growth driver throughout 2019.
"As wages and employment continue to grow amidst low inflation, household consumption is set to remain the main driver of growth throughout the forecast period", it added.
The European Commission said that investment growth should further strengthen in 2019 as it will be moderating in 2020, due to improved uptake of EU funds and low-interest rates.
"Goods exports are expected to rebound in 2019, while service exports are expected to continue easing as supply side constraints become more evident and international competition in the tourism sector intensifies," the Commission predicted.
It also said that the contribution of net exports to growth will fall in 2019. They will improve again in 2020 but will remain negative.
Employment growth should moderate over the forecast horizon and the unemployment rate is expected to continue declining towards a historic low in 2020.
The Commission forecast an inflation rate of 0.9% in 2019 and 1.0% in 2020 for Croatia.
It also increased its forecast for Croatia's economic growth in 2020 to 2.7% from 2.5% predicted in May.