ECONOMIC OUTLOOK - EU Sees Macedonian Economy Recovering in '10, Croatian GDP Returning to Tangible Growth in '11

MACEDONIA

Macedonia’s economy is expected to decline by about 2.0% in 2009, due to shrinking exports, lower investment and a drop in private consumption, the Commission said in its autumn report.

In 2010, the negative impulse from the global crisis is expected to subside, which should allow the economy to expand by around 1.5%, the report added.

The main sources for this recovery will be private and public consumption, while exports are likely to remain sluggish, it added.

In 2011, economic activity is expected to increase by some 2.5%, benefiting from the recovery of the country's export markets.

In October, the European Commission recommended the opening of accession negotiations with Macedonia in the light of the progress achieved by the Balkan country. Macedonia was granted an EU candidate status in December 2005.

CROATIA

The report projects a fall in Croatia's 2009 gross domestic product of close to 6.0% year-on-year followed by a zero growth rate in 2010 and continued mild recovery in 2011.

Upside risks are mainly related to a faster-than-projected economic recovery in the EU as well as to the clear prospect of Croatia's accession in the near future which may provide additional impetus to the candidate countries through stronger net foreign direct investment flows, inter alia. For 2011, the forecast projects a small positive growth of around 2.0%, mainly based on a slight acceleration of private consumption and investment growth, while net exports continue to contribute negatively to output growth.

The slight recovery of economic activity forecast for 2010 and 2011 is expected to somewhat ease the pressures on the labour market, but not yet to support a significant reduction of unemployment, the report said.

The European Commission said in October that Croatia has made good progress in its accession talks with the bloc and the negotiation process could be concluded in 2010 if the country meets all outstanding benchmarks in time.

Details from the European Commission report on the economic development of Croatia and Macedonia follow (spring report forecasts in brackets):

CROATIA

MACEDONIA