Croatia struggling to exit recession, commission| MENAFN.COM

Tuesday, 09 August 2022 11:52 GMT

Croatia struggling to exit recession, commission

(MENAFN- The Journal Of Turkish Weekly) Latest European Commission prognosis says Croatia's economy is slowly exiting recession after six years - still battling a large budget deficit and a debt mountain.

In its spring forecast, the European Commission says Croatia is finally starting to come out of economic crisis after six years.

The prognosis estimates that Croatia will record 0.3 per cent growth in its GDP in 2015, after six years of continuous fall. In its winter forecast, issued in February, the Commission predicted slightly lower growth of 0.2 per cent in 2015.

Even with the slightly better rate, Croatia still is at the bottom of the EU growth table, along with Finland and Cyprus. Cyprus will remain in recession in 2015.

Ireland and Malta top of the list with expected 3.6 per cent GDP growth, followed by Luxembourg with 3.4 per cent and Poland with 3.3 per cent.

The main reasons cited for Croatia's limited growth are lack of investment and inadequate use of EU funds. For 2016, the Commission estimates growth of 1.2 per cent, stimulated by better absorption of EU funds.

Nevertheless, Brussels remains concerned about the budget deficit, which will amount to 5.6 per cent of annual GDP in 2015 and hit 5.7 per cent in 2016. These figures are 0.1 per cent higher than those given in the "winter" forecast.

The high budget deficit is the reason why Croatia is having to undergo the excessive budget deficit procedure in the EU, which obliges it to carry out certain reforms and make budget cuts to lower the deficit.

Another problem area for Croatia is the large and growing debt. The Commission predicts that national debt will be equal to 90.5 per cent of Croatia's GDP in 2015, reaching 93.9 per cent of annual GDP in 2016.

This is worse than the February forecast, which predicted public debt of 84.9 per cent of annual GDP in 2015 and 88.7 per cent in 2016.

Brussels predicts no significant improvement on unemployment in the next two years. The jobless rate reached 17.3 per cent in 2014, while the Commission expects this to fall to 17 per cent in 2015 and to 16.6 per cent in 2016.

Regarding investment, the Commission predicts it to fall in 2015 by 1.8 per cent. However, 1.6 per cent growth can be expected in 2016.

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