Croatia’s economy will decline faster than was expected this year – and no recovery is in sight before 2014, the European Commission predicted on Wednesday.The Croatian economy could decline by about 1.9 per cent this year, the Commission said in it’s regular overwiew, correcting it’s April predictions that the fall wouldn’t exceed 1.2 per cent.
In April, the Commission estimated that the Croatian economy could start to recover next year, with 0.8 per cent annual growth in 2013.
But the estimates published Wednesday says that stagnation is likely to dominate Croatia in 2013, while recovery may start in 2014 with 1.4 per cent growth.
“The Croatian economy continues to face negative cyclical and structural trends. The fall of activity in many EU member states in 2012, including some of Croatia’s most important trade partners, influences its economy,” the Commission said in a report on Wednesday.
Brussels has also raised its estimates for unemployment and inflation for this year in Croatia. Instead of the predicted unemployment rate of 13.4 per cent in April, the new estimate is 14.2 per cent.
In April, inflation was expected to run at 2.4 per cent a year. Now it is revised upwards to 3.4 per cent.
The Croatian government, formed at the beginning of this year, has failed to fulfill its election pledges of huge public investments, which could motivate economic growth.
Experts warn that the country needs more than 5 percent GDP growth only to regularly service international debt obligations.
Since 2008, when the global crisis hit Croatia, the country lost more than 120,000 working places, which is more than a third of all working places.
There are about 340,000 unemployed workers currently in Croatia.