UniCredit: Start of slow recovery in Croatia

Although the economic downtrend was continued in Q2, at a 2.5-percent annual rate, the Q3 data indicate that the downturn is nearly over, Zagrebacka banka’s chief economist Goran Saravanja said, presenting UniCredit’s CEE Quarterly for the fourth quarter. He maintains a 1.5-percent economic contraction projection for 2010, with a mild recovery and a 1.6-percent growth next year.

The inflation projection for 2010 stays at 1.0 percent, while average inflation rate in 2011 should be at 2.5 percent. The balance of payment current account deficit projection also stays unchanged, at 3.7 percent of GDP. Slower growth of foreign debt, lower balance of payment deficit and smaller absolute amount of foreign debt payments in 2011 all indicate further FX stability and unchanged monetary framework, Saravanja says.

While Saravanja expects Croatia to complete its accession negotiations with the EU by the end of June 2011, he notes that the risk of exceeding this deadline is not insignificant.

News source: Limun.hr link: article