The European Commission stands by its expectation that the Croatian GDP will grow by 2.8% in 2018, same as three months ago. The EC sees personal consumption as the main motor of growth, and Agrokor restructuring as the biggest individual threat.
As for last year, the Commission still believes Croatian GDP grew by 3.2%, the same as it forecasted last autumn. The Statistical Institute is expected to publish the final 2017 numbers by the end of this month. Data for the first three quarters of 2017 show around 3% growth. After the recent corrections indicated the GDP growth in 2016 to be around 3.2%, the EC believes that the same rate of growth will continue in 2017 since the economic activity was intensive in the first three quarters of last year.
However, there are indications of a slowdown in the last quarter, and the Commission believes this slowdown will continue into 2018. Growth will continue to be fueled by personal consumption, and rise of salaries and employment adds to disposable income and consumer confidence. Although last year investments were hindered by the Agrokor crisis, they are expected to recover because of increased credit activity in the corporate sector. However, Agrokor financial and operational restructuring still represents a risk. The Commission also expects net imports to grow because of increased domestic demand. Employment is steadily on the rise, but the previous sharp drop in unemployment is expected to plateau as the migration outflow loses steam. Salaries are expected to continue to grow, especially since labor market conditions are deteriorating in sectors where labour is lacking. Rise of salaries in the public sector is also expected to contribute to rise of other salaries.
This is the fourth year in a row that the Croatian economy continues to grow. In 2019 the EC believes the Croatian GDP will grow by 2.7%, bringing the country finally back to the pre-crisis levels. But the inflation is also set to grow, mainly because of expected pressure from prices of energy. Last year the harmonized consumer price inflation rose by 1.3%, and the EC expects it to be 1.6% for 2018, and rise to 1.7%.
This more or less corresponds to other agencies’ predictions, as the Croatian National Bank predicts the GDP to grow by 2.9%, the IMF expects the same 2.8% growth, and the World Bank is slightly more conservative predicting growth of 2.6%.
This is higher than the EC-predicted EU average of 2.3% for this year, and 2% for the year after that. The EC published the same figures for the Eurozone. The highest growth is expected in Malta, 5.6%, and in Romania, 4.5%. Ireland is expected to grow by 4.4%, and Poland and Slovenia by 4.2% each. Slowest growth is expected in the UK, of 1.4%, followed by Italy, 1.5%, and Belgium, at 1.8%.