October 19 (SeeNews) - The World Bank affirmed on Thursday its growth forecast for Croatia's economy at 2.9% this year, while boosting slightly its previous forecast for 2018 to 2.6% on the back of personal consumption and exports led by strong tourist performance.
In June, the lender predicted Croatia's economy would expand by 2.5% in 2018.
The World bank also lifted its forecast for Croatia's 2019 economic growth to 2.8% from a June estimate of 2.6%, it said in its October 2017 Migration and Mobillity, Europe and Central Asia Economic Update.
The World Bank predicted that over the next few years, Croatia's personal consumption will remain robust, reflecting fiscal easing, labour market recovery, and increased consumer confidence.
It forecast the country's inflation at 1.5% in 2017, reversing a 1% deflation in 2016, before easing to 1.4% next year, where it will remain in 2019.
Downside risks to Croatia's GDP growth include still high levels of private sector indebtedness, an ongoing pre-bankruptcy proceeding of the largest firm Agrokor, and the possibility of a further rise in the risk premium for emerging markets, the World Bank noted.
It added that the country must refinance around 11% of GDP of public and guaranteed debt a year in 2017-19, while also working towards improving its credit rating.
In 2016, Croatia's GDP eaxpanded by 3.0%.
Croatia exited a six-year recession in 2015 and saw growth of 2.2%.