Croatian recession halted in the middle of this year and the recovery is underway, the latest European Commission report on the state of the economy shows. The report is published twice a year and looks at EU states, aspiring members and several top world economies. The recovery is especially visible in the industrial sector. EC reports also point out that retail sales have registered a growth on an annual level and that exports have helped to alleviate the recession and continue to make a positive contribution to GDP growth. The GDP is expected to fall 1.8 per cent this year, with the recovery bringing it up next year by 1.5 per cent and by 2.1 per cent in 2012.
The report sees private spending and investments as the main driving force behind the growth, as well as the presence of several other positive influences such as the EU’s relatively quick recovery, the proximity of EU membership, and a stronger influx of foreign direct investment. Potential negative influences are the dependence on external financing and the delay of the fiscal consolidation. It is not likely that the economy will reach pre-recession rates of growth in the short term, the portal Business writes. But the global economic crisis had hit the Croatian economy, especially in 2009 when the GDP dropped 5.8 per cent.
According to estimates, the budget deficit will reach 5.7 per cent of the GDP this year, and is likely to grow in 2011. It is expected to come back to this year’s levels in 2012. The report also sees the upcoming parliamentary elections as the main barrier for short term stabilization. There will be a big increase in public debt from 35 per cent in 2009 to almost 50 per cent in 2012, the report predicts. Exports grew while imports fell in the first half of the year. The physical indicators of this year’s tourist season were strong and there are indicators of the recovery of consumer confidence. The private consumption will receive a boost through a progressive elimination of the crisis tax that was implemented in 2009. The unemployment rate grew from 9.1 per cent in 2009 to 12.4 per cent in the second quarter of this year, and the annual unemployment rate for this year could reach 12.5 per cent. An end to the growth of unemployment is expected next year, with 2012 bringing a decrease to approximately 11 per cent.
The report sees private spending and investments as the main driving force behind the growth, as well as the presence of several other positive influences such as the EU’s relatively quick recovery, the proximity of EU membership, and a stronger influx of foreign direct investment. Potential negative influences are the dependence on external financing and the delay of the fiscal consolidation. It is not likely that the economy will reach pre-recession rates of growth in the short term, the portal Business writes. But the global economic crisis had hit the Croatian economy, especially in 2009 when the GDP dropped 5.8 per cent.
According to estimates, the budget deficit will reach 5.7 per cent of the GDP this year, and is likely to grow in 2011. It is expected to come back to this year’s levels in 2012. The report also sees the upcoming parliamentary elections as the main barrier for short term stabilization. There will be a big increase in public debt from 35 per cent in 2009 to almost 50 per cent in 2012, the report predicts. Exports grew while imports fell in the first half of the year. The physical indicators of this year’s tourist season were strong and there are indicators of the recovery of consumer confidence. The private consumption will receive a boost through a progressive elimination of the crisis tax that was implemented in 2009. The unemployment rate grew from 9.1 per cent in 2009 to 12.4 per cent in the second quarter of this year, and the annual unemployment rate for this year could reach 12.5 per cent. An end to the growth of unemployment is expected next year, with 2012 bringing a decrease to approximately 11 per cent.
News source: Croatiantimes.com link: article
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