EXECUTIVE SUMMARY 5 MACROECONOMIC OVERVIEW 6 EC raises Croatia’s 2015 GDP growth forecast to 1.1% 6 EBRD raises to 0.9% Croatia’s GDP growth forecast for 2015 7 World Bank forecasts 0.9% growth in Croatia in 2015 7 REAL SECTOR 8 1. GDP, Inflation 8 Croatia’s central bank raises GDP growth outlook 8 Croatia’s economy to expand 0.3% in 2015 - Ernst&Young 8 Croatia's consumer prices fall 0.8% y/y in September 8 Croatia’s economic sentiment improves in October 9 2. Industry and Trade 10 Croatia's industrial output growth speeds up in September 10 Croatia's retail sales growth accelerates in September 10 Croatia’s construction works index down 0.5% y/y in August 11 Croatia’s industrial sales fall in August 11 3. Labour Market 11 Croatia’s unemployment rate rises to 16.2% in September 11 Croatia’s average net monthly salary rises by real 4.2% y/y in August 12 One in six unemployed Croatians finds jobs in second quarter - Eurostat 13 4. Tourism 13 Tourist arrivals to Croatia rise 11.8% y/y in September 13 FISCAL SECTOR, MONETARY POLICY 13 Croatia’s state debt falls to 85.7% of GDP in Q2 - Eurostat 13 Croatia sells €184mn worth of kuna, euro T-bills, beats target 14 Croatia's M4 money supply up 4.6% y/y to €37.9bn at end-September 14 Croatia’s 2014 budget deficit at 5.6% of GDP, gross debt at 85.1% of GDP – revised data 15 Croatian central bank slashes lombard, discount rates 15 Croatia's January-August central govt deficit drops 25% y/y 16 FINANCIAL INTERMEDIATION 16 Austria's Erste rides CEE recovery to swing to profit in Jan-Sep 16 Croatian central bank accepts all bids in weekly reverse repo auction 18 Croatian insurers' premium income rises 2.4% y/y in January-September 18 Intesa Sanpaolo turns to 9-mo net loss in Croatia 19 Zagreb bourse’s turnover rises 16% m/m in October 19 Slovenia calls for bank depositors from Bosnia and Croatia to verify claims dating to breakup of Yugoslavia 20 Croatian mandatory pension funds’ assets up 11.2% y/y in September 20 Croatian bank rehabilitation agency takes over management of Jadranska Banka 20 Croatian banks ask Constitutional Court to assess legality of Swiss franc loans conversion 21 EXTERNAL SECTOR 22 Croatia's trade gap widens to €4.8bn in January-August - revised data 22 Croatia’s gross foreign debt rises 0.9% m/m in July 22 Croatian c-bank foreign reserves up 11% y/y to €13.4bn 23 Croatia attracts €1bn in FDI so far this year 23 STRUCTURAL REFORMS 24 Croatia accepts Avenue Group bid for €100mn tourism project 24 Croatia drops one place in World Bank's 2016 Doing Business ranking 25 Croatia announces gas price cuts ahead of general elections 25 Slovakia’s J&T Group reportedly planning to take over Croatian conglomerate Adris Grupa 26 Croatia’s Podravka makes buyout offer for Slovenia’s Zito 27 Croatia’s LNG Hrvatska extends deadline for LNG terminal bidding 27 INA-MOL could replace Shell in Bosnian exploration project 28 POLITICS 29 Croatia’s main political parties neck-in-neck in general elections race 29 Croatia won’t rule out building fences to manage migrant flow 31 Hungary shuts border with Croatia 32
Croatia Country Report - October, 2015 Description
This report reviews key macroeconomic data and microeconomic developments for Croatia published between October 7 and November 6, 2015.
In the beginning of November, the European Commission raised its 2015 growth forecast for Croatia’s economy to 1.1% from 0.3% projected in May. The growth should be supported by increasing external demand and a halt in the domestic demand contraction. The 2016 outlook was also revised up to 1.4% from 1.2% projected in the spring forecast.
The World Bank is less optimistic for this year, expecting 0.9% growth. However, the new forecast represents an improvement compared to the 0.5% growth projection made in June. The EBRD also upgraded this year’s growth forecast for Croatia to 0.9% from the previously projected 0.5%.
The Croatian central bank is the most optimistic, expecting 1.2% economic expansion in 2015. In July, it was expecting only 0.5% growth.
The report also provides details on the latest developments in the tender for the development of a LNG terminal on the Croatian island of Krk and reveals the results of an opinion poll ahead the general elections scheduled for November 8.
It also mentions Croatia’s ranking in the latest Doing Business Report of the World Bank.
Croatia's consumer prices fell 0.8% y/y in September, after dropping 0.6% the previous month. The working-day adjusted industrial output rose 5.4%, speeding from 2.8% in August. The annual growth of the first nine months of the year reached 2.3% y/y.
The unemployment increased to 16.2% in September from 15.9% in the previous two months. The average net monthly wage rose 4.2% in August, slowing from a 3.8% hike in July.
January-August trade gap widened 0.5% y/y as exports rose at a faster pace than imports.
Government debt-to-GDP ratio fell to 85.7% in the second quarter of the year from 87.7% in the previous quarter