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Intesa cuts Croatia's 2017 GDP growth fcast on Agrokor problems

Intesa cuts Croatia's 2017 GDP growth fcast on Agrokor problems Author: Banca Intesa. License: All rights reserved.

ZAGREB (Croatia), June 30 (SeeNews) - Italian banking group Intesa Sanpaolo said it has trimmed its 2017 economic growth estimate for Croatia to 2.9% from a previous 3.2% due to a demanding restructuring process in the country's ailing food and retail concern Agrokor.

In 2018, the lender expects growth to moderate further to 2.5% as the boost from this year's tax cuts fades and troubled concern Agrokor's restructuring puts additional pressures on related stakeholders, Intesa Sanpaolo said in its June forecast note.

It added, however, that the tourist season could partially neutralise softening personal consumption and investment profile due to issues in Agrokor.

Intesa projects that Croatia will turn to inflation of 1.2% this year, from a 1.1% deflation last year, with consumer prices expected to grow to 1.6% in 2018.

In terms of banks, the lender said it has upgraded its loan growth forecast for 2017 from minus 1.5% year-on-year to minus 0.9% year-on-year on the back of a stronger-than-expected recovery of household demand. At the same time, it has cut its deposit forecast from an annual 1.9% to an annual 1.5%, mostly due to continued outflow of forex savings of citizens from banks to investments with higher yields.

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