September 20 (SeeNews) - Erste Group said it has raised its estimates for Croatia’s economic expansion to 3.0% in 2017, from 2.7% projected in August, due to the robust domestic demand momentum and further improving external demand outlook.
The forecast for Croatia’s economic growth in 2018 has been lifted to 2.8% from 2.4%, while a 2.9% rise is expected in 2019, Erste Group's analysts said in their latest macroeconomic outlook report on Croatia published on the bank's website earlier this week.
"The inflation outlook supports an ongoing loose monetary policy stance," the analysts said. "The fiscal position is looking to remain under control, as we see the deficit remaining close to 2016 levels (0.8% of GDP), hence supporting further public debt decline and adding to the expectation of positive news from rating agencies in the coming quarters."
The second half of 2017 is unlikely to bring many surprises, with sound domestic demand and the record-breaking tourism season favouring modest growth acceleration.
"Domestic demand remains backed by improving labour market conditions and disposable income growth, resilient consumer sentiment and a less aggressive inflation trajectory than anticipated," the analysts added.
Investments are seen as maintaining a growth pace of 4-5%, supported by private sector investments in tourism and projects financed from EU funds and, as seen in the second quarter of 2017, trimmed to some extent by the impact of the crisis in Croatian concern Agrokor, Erste said.
In August, Erste said it maintained its economic growth forecast for Croatia at 2.7% in 2017 and 2.4% next year.