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Croatia Country Report - April, 2016

Croatia Country Report - April, 2016

This report reviews key macroeconomic data and microeconomic developments for Croatia published between April 1 and April 28, 2016.
The World Bank forecasts GDP growth in Croatia will accelerate to 1.9% this year from 1.6% in 2015 thanks to expected growth in tourism and investments driven by EU funds absorption.
The International Monetary Fund forecasts steady growth of more than 3% for the Southeast Europe region between 2016 and 2021, outstripping most of Western and Central Europe as countries from the region continue on their convergence path.
The report also provides details on economic sentiment indicators, and construction output. It mentions latest developments in structural reforms. The report also reveals the latest investments in tourism sector, and the details on public borrowing.

Key Points:

Croatia’s general government deficit declined to HRK10.7bn (€1.43bn) or 3.2% of GDP in 2015 from HRK18.1bn or 5.5% of GDP in 2014.

Croatia's consumer prices fell 1.7% y/y in March, deepening from a 1.4% annual decline the previous month.

Croatia's registered unemployment rate declined, for the second consecutive month, from 17.8% in February to 17.2% in March.
The number of tourist arrivals at commercial accommodation in Croatia rose 14% y/y to 350,328 in January-February.<


EXECUTIVE SUMMARY 5
MACROECONOMIC OVERVIEW 6

World Bank forecasts 1.9% growth in Croatia this year 6
Western Balkans countries on strong convergence path, IMF survey shows 8
IMF revises up Croatia’s 2016 growth forecast to 1.9%
CEE sentiment worsens in April
Croatian banking association revises up GDP growth forecast for 2016 to 1.3%
German investors more optimistic on Croatian economy this year, survey shows 14
REAL SECTOR 15
1. GDP, Inflation 15
Annual deflation in Croatia deepens to 1.7% in March 15
2. Industry and Trade 16
Croatia’s adjusted construction works index up 8.3% y/y in February 16
Croatia's retail sales growth decelerates further in February 17
Croatian army awards €27mn worth of contracts to 27 domestic companies 19
Stock Spirits hits out at Polish wholesaler as takeover tussle escalates
New Southeast Europe energy exchanges boost regional integration
House prices in Croatia decrease 2% y/y in Q4
Croatia's building permits up 27% y/y in January-February
Croatia’s industrial output up 4.4% y/y in February
Croatian new passenger car registrations rise 9.7% y/y in Q1
Croatia’s Djuro Djakovic Special Vehicles signs €26mn export deal with Finland’s Patria Land Systems
Croatia’s adjusted industrial sales decline 5.4% y/y in Jan-Feb
Croatian Atlantic Grupa’s net profit rises 1.6% y/y in Q1
Croatia's gross electricity production rises 3% y/y in February 32
3. Labour Market 32
Unemployment rate in Croatia declines further to 17.2% in March 32
Croatia’s average net monthly salary declines by nominal 2% m/m in February
4. Tourism 35
Orco Property Group sells remaining 15.77% stake in Croatia’s Suncani Hvar for €8.15mn
Passenger traffic at Croatian airports up 12% y/y in February
Tourist arrivals in Croatia rise 14% y/y in January-February
Albania, Croatia and Italy to cooperate in agritourism sector 39
FISCAL SECTOR, MONETARY POLICY 39
Croatian central bank accepts all bids in weekly reverse repo auction 39
Croatia sells €90mn worth of 364-day kuna bills, above target 40
Croatia’s general government deficit declines significantly to 3.2% of GDP in 2015 42
FINANCIAL INTERMEDIATION 44
Croatian insurers' premium income down 0.47% y/y in Q1 44
Croatian mandatory pension funds’ assets up 0.78% m/m in March . 45
EXTERNAL SECTOR 46
Croatia's foreign trade gap widens 4.5% y/y in January-February
Croatia’s current account surplus reaches record €2.3bn in 2015 49
STRUCTURAL REFORMS 49
Croatian motorway operator HAC obtains €250mn loan from EBRD 49
Croatian police chief arrested for stealing cash and gold from headquarters 50
EU to invest €25mn in rule of law, human rights projects in Western Balkans and Turkey 51
Poland and Czech Republic to benefit least from euro adoption 52
POLITICS 53
Serbia hands protest note to Croatia over "insulting statement" by foreign minister Error! Bookmark not defined.
COMMENT: Bosnia’s legal breakdown 55
Croatia’s democracy score remains constant in 2016, Freedom House says 57
Croatian Jews hold separate holocaust commemoration, boycott government event
Corruption perception improves in Croatia, Ernst & Young survey shows
Croatia falls five places to 63th in World Press Freedom Index
Croatian commission rules president undermined her office’s credibility
Dinamo Zagreb officials charged with tax evasion and embezzling transfer profits
Refugee crisis worsens press freedom conditions in Southeast Europe

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