The World Bank County Manager for Croatia, Elisabetta Capannelli, warned Croatia that it should continue to reform in order to adjust the structure of its economy and avoid risks of low growth and lagging behind other new EU member states.
Capannelli also stated that introducing the Euro would be good for Croatia as its economy is highly dependent on Euro, but not before the economy becomes more resilient. This can be done by decisive reforms. She also estimated that the reform momentum got weaker since Croatia joined the EU in 2013. “The momentum is largely lost. Croatia is mostly dependent on Tourism and has a very large and inefficient public sector. The private sector is small and insufficiently dynamic. So reforms are needed to improve growth perspective.”
“Also, the private sector is still burdened by high taxation and various administrative charges. There are many uncertainties in administration of justice, productivity is low, and problems of health and pension systems generating losses need to be resolved. Step by step reforms are not sufficient.”
She believes the numbers show good fiscal results over the past two years, but that there is still a major action missing towards reduction of public spending. Capannelli greeted the Government’s promise to seriously tackle economic reforms in 2018. “There is awareness among policy makers of what needs to be done. The question is who and when will initiate it.”