May 7, 2022 - In our new TCN series, we uncover the lives of expats that have spent over 5 years in Split. First up, meet Elga Mannik!
Two idyllic weeks on a Croatian beach is very different from the realities of full-time living. So what is it really like to live in Croatia as an expat? In a new series on TCN, we meet expats who have lived here for 5 years or more, to find out from them the good, the bad, and the ugly of 12-month living in Croatia. First up, Elga Mannik from Canada!
1. Tell us firstly how you came to Croatia? What motivated you to choose this slice of paradise and how long have you now been here?
I am from Toronto, Canada but had visited Croatia a few times. My sister came here to settle and I followed her when I retired. My mother was Croatian and always talked fondly of her homeland. I fully intended to retire in Europe but was thinking possibly Spain or Italy. I needed to get my EU passport so when I arrived 7+ years ago, I applied for citizenship and by the time that it came through, I was hooked.
2. Looking back, what were your perceptions and expectations?
I really had no perceptions and planned to travel around the country and get a better understanding of the people and the culture. My expectation was to be in a warmer climate where there was a sea and sun.
3. After over 5 years here, how have those perceptions changed. Do you now view Croatia differently?
I am absolutely in love with Croatia. I felt so at home here and believed that I could easily assimilate despite not knowing the language. I started out by doing a few semesters at the University here in Split and am still continuing with private lessons. I understand the language a lot better and can speak enough to get by but it hasn’t been easy. I now feel that Croatia for me has changed from an interim holiday experience to my home. I am a Splićanka. I bought a tiny stone house in Varoš and finally feel settled and extremely lucky to be living in such a beautiful place.
4. After your time year, the 3 things you love most about Croatia?
The weather, the people, the history (did I mention the weather)!
5. And the 3 things you would like to change.
I know a lot of people have issues with bureaucracy and government issues but so far, I have managed to get things done that needed to be done and really can’t say that I would change much. I am an optimistic person who sees the good in most things and feels that changing things to any great degree would detract from the overall feel of the place.
6. Given your experiences, what advice would you give to any would-be expat thinking of making the move?
I would say, what are you waiting for? There is nothing that you can’t find in your home country but so much more than you can imagine.
7. The most beautiful place in Croatia, and why?
There are so many beautiful places here, among them Plitvice, Istria, Zagreb...I could go on and on but for me, my weekly hike on Marjan when I’m walking alone through the trees and seeing the bluest water is by far the most beautiful.
8. Your favourite moment of your time in Croatia?
Last Christmas, having more people in my house than it could comfortably hold was such a joy. Covid was receding, we were all vaccinated and I made vast quantities of Kuhano Vino and we all celebrated the end of lockdowns, with ex-pats and locals all crammed in laughing and singing. It was amazing.
Are you an expat who would like to be featured in this series? If yes, please contact This email address is being protected from spambots. You need JavaScript enabled to view it. Subject Expat
For more, make sure to check out our dedicated lifestyle section.
May 7, 2022 - Šibenik Catholic school olive oil returned to Croatia with a gold medal at the NYIOOC world competition in New York!
While some may be surprised by this news, the Šibenik Catholic school olive oil connoisseurs believe it was expected, writes Šibenski.hr.
In the competition of oil mills from Italy, Spain, Greece, Morocco, Turkey, New Zealand, Japan, USA, Israel, Tunisia, China, France, Portugal, Cyprus, Lebanon and about twenty oil mills from Croatia, Šibenik was declared the best. Around 1,174 samples were submitted to the competition, which proves that the Šibenik Catholic school produces world-renowned oil.
This whole story is even better because the olive grove is cared for by children through the school cooperative "Školjka". Of course, all with the mentorship of more experienced school employees, primarily the school janitor, Marko Rupić, who spends most of his time in the olive grove, and Šime Petrović, head of accounting, who is in charge of coordinating harvesting and processing.
"There are currently 311 students in the school," says the school principal, sister Mandica Starčević, who revealed the olive grove was once part of the military barracks.
"The whole school is included in the cooperative. In addition to the cooperative, we have several extracurricular activities that allow students to develop their knowledge according to their interests. We also have home economics, robotics, art group and many others. The pandemic has slowed us down a bit in all this, but now we are slowly returning to the usual rhythm," claims the director.
The first trees in the school olive grove were planted almost 30 years ago by soldiers, as there used to be a barracks where the school is located. Then, with the construction of a new part of the school about 13 years ago, the school staff planted new trees, which, it turned out, gave an excellent yield and even better oil.
"Then we planted new plantations, about 110 trees, and now there are about 170 in the olive grove. This year we had a slightly lower yield, but there were years when we knew how to harvest up to three tons of olives. So although the yield was not at the expected level, the oil was of the highest quality," says Šime Petrović, a school employee who, along with the caretaker, Marko, is most responsible for the olive grove.
If it weren't for Ante Duvnjak from the St. John oil mill in Vodice, Petrović claims, they wouldn't have sent their oil to a competition in New York.
"I must emphasize this: he took the initiative, and we agreed to participate in the competition at his urging. He sent samples of olive oil from all over Croatia to the competition, not just ours. The other thing I have to point out is our elementary students. Their involvement and enthusiasm around the olive groves is wonderful; that is the essence of everything," adds Petrović.
The olive grove is dominated by only one variety, oblica. However, the school janitor Marko Rupić said that he is extremely grateful for this.
"As far as cultivation is concerned, these are olives of exclusively organic origin. We do not use any chemicals and preparations, which nature does. I think that is partly why our oil is so high quality," says Rupić.
"I spend a lot of time in the olive grove because it is a large area. In addition to olives, I also take care of regular mowing, which requires time and effort. We bought a few fruit seedlings, and we may also plan to plant a small vineyard; we will see; one or two more pairs of hands would not be out of the question," Rupić said.
Parasites and irrigation in the olive grove are two problems this hard-working janitor faces. The first problem will be solved by planting lavender, which is known to repel parasites from trees, while the second has yet to find a solution.
"Parasites and diseases have never been as they are now. We do not use any chemicals; although it might be easier to maintain and protect olives with them, we will not give up on organic farming. All the water that olives get is from what I water or rainwater, and irrigation would be essential to us," concludes Rupić.
The school also does not sell their olive oil and uses it primarily for their own needs or pass it on to those who need it. For example, a group of students arrived from Norway, France and Spain and recently received a bottle as a souvenir.
For more, make sure to check out our dedicated lifestyle section.
May the 7th, 2022 - The continuing issues faced by the Croatian labour force (or lack of it, to be more precise) could be solved by altering a current law and increasing the limit on how much students are allowed to earn without them, or usually their parents, facing tax issues.
As Poslovni Dnevnik writes, irritated employers have rightly pointed out that the income threshold after which the right to tax relief is lost for students is much too low, and that raising it would encourage students to not only seek out employment, but to be willing to work more. Therefore, they've suggested that the threshold be raised to 30,000 kuna, with different treatment if the taxpayer (their parent) has more children. This could solve the problems faced by the Croatian labour market, particularly when it comes to seasonal and tourism employment.
According to tportal, this initiative from the Croatian Employers' Association (HUP) is also being strongly supported by the president of the Croatian Tourism Association, Veljko Ostojic, who very formly believes that the greater engagement of students in seasonal jobs in the tourism sector would reduce the need for the import of foreign labour, and the administrative issues and ridiculous waiting times for work permits that come with that.
''We've proposed to the Government that the non-taxable income limit for dependent members be raised to 30,000 kuna. We believe that in this way, a significant number of people would be activated on the Croatian labour market,'' Ostojic said.
Student work is otherwise regulated by the Student Affairs Act, and the current law on that has been in force since November 2018.
Students are employed through authorised intermediaries, which can be student centres or higher education institutions that have a centre for student standards, provided that they have received approval from the Ministry of Science and Higher Education to conduct mediation activities. The law also regulates the minimum hourly wage, which is calculated by dividing the amount of the minimum gross salary by 160. The hourly wage is adjusted once a year, and for 2022 it amounts to 29.30 kuna.
Altering this and increasing the amount students are free to earn without facing issues from the tax man would not only put a gradual stop to importing non-resident staff, but put the Croatian labour market in a far better position when it comes to the height of the summer season, when good staff are increasingly difficult to come by for would-be employers.
For more, check out our dedicated business section.
May the 7th, 2022 - A Bulgarian delegation from Gabrovo University recently paid a visit to Zagreb University, more specifically to the Faculty of Metallurgy which is located in Sisak.
As Poslovni Dnevnik writes, this past week, a delegation of the Technical University of Gabrovo, led by the Rector prof. dr. sc. Iliy Zhelezarov and vice-rector, doc. dr. sc. Plamen Tsankov, paid a visit to one of Zagreb University's faculties in Sisak.
The visit of the Bulgarian Technical University to the Faculty of Metallurgy in Sisak was part of a working visit by a delegation from the Bulgarian city of Gabrovo, led by Mayor Tanja Hristova.
“We presented our guests with the activities which are undertaken at the Faculty of Metallurgy, and we also talked about possible cooperation and joint future projects. As one of the leaders of the metallurgical industry in the Republic of Croatia, with experience and all awards and recognitions, the Faculty of Metallurgy can be a good example to our colleagues from Bulgaria. On the other hand, the Technical University of Gabrovo can continue to be a role model for us when it comes to everyday work and projects,'' said the dean of Zagreb University's Faculty of Metallurgy in Sisak, Zdenka Zovko Brodarac.
The hosts also introduced their Bulgarian guests to the curriculum and directions at the faculty, and they were especially interested in the fact that after graduating from the Faculty of Metallurgy, students find a job within three months and that a large number of them find a job while still studying, and that scholarships are provided for all students.
They were also pleasantly surprised by the fact that almost half of the students at the Faculty of Metallurgy in Sisak are women, which is a fantastic message to send out in an industry which has always been dominated by males.
The meeting, which took place in the City Hall of the Faculty of Metallurgy, was followed by a tour of the laboratory and the building of the faculty itself.
For more, make sure to check out our lifestyle section.
May the 7th, 2022 - The Grand Hotel Brioni has opened its luxurious doors in the much loved Istrian city of Pula, enriching the area's overall tourist offer and providing its guests with stunning views over the nearby Brijuni islands, after which the facility is named.
As Poslovni Dnevnik writes, the Grand Hotel Brioni has just opened in the City of Pula and is ready to receive guests after a highly detailed renovation and decoration process which made it one of the largest investments in Croatian tourism, worth over 34 million euros. This luxury hotel has 227 rooms and is part of the Arena Hospitality Group's enviable portfolio. Such an investment will raise the tourist offer of Pula and the whole of Istria to an even higher level, and significantly enrich the Croatian tourist offer as a whole.
This year, the famous Pula hotel is celebrating its 50th anniversary, and throughout history it has been one of the leaders in the hotel industry in Pula and Croatia. With this investment, the Grand Hotel Brioni received a unique and modern interior and exterior design, and the first guests have already been announced. The total area of the hotel spans a huge 21,000 square metres with about 27,000 square metres of landscaped exterior with oases for relaxation as well.
The exclusive feeling the facility offers is the result of carefully planned decoration, imbued with refined elegance, grey with blue details accompanied by the warm tones of wood, artistic and marine/coastal details. For the decoration of each room, works by local artists have been selected that give the impression that each room is a small art residence of sorts. The Grand Hotel Brioni is also well equipped with a system of smart hotel rooms that is in line with the latest trends and technologies. Guests can check in online and room doors are unlocked with a digital key via their own smartphone.
The City of Pula organised a lunch on the occasion of the Day of the City of Pula in the Grand Hotel Brioni on the opening day, which was also attended by the President of the Republic of Croatia Zoran Milanovic. On the occasion of the opening, Reli Slonim, the President of the Management Board of Arena Hospitality Group stated the following:
"Brijuni is an internationally attractive destination and we're pleased to be able to welcome guests in honour of one of the most beautiful Adriatic gems in this special ambience of the newly renovated Grand Hotel Brioni, which boasts a rich history. We've kept the best of the past so the quality architecture and exterior of the hotel has remained the same, but the hotel has been completely refurbished.
Guests can enjoy the luxurious furnishings and each room is equipped with the latest technology. The hotel has several conference halls, which can be adapted to the needs of congress tourism and various business and social events. Providing the perfect destination for rest, relaxation and enjoyment, but also for corporate needs, the Grand Hotel Brioni will be open all year round. Our goal is to provide permanent jobs for all 230 hotel employees, and we plan to further expand our team as time goes on.''
The Grand Hotel Brioni is preparing a top gastronomic offer for guests from across the rest of Croatia and the world, backed by an exceptional culinary team led by chef Luka Jukic, and the hotel has as many as 4 restaurants. In the relaxation areas, guests will get to enjoy the best numerous beauty treatments, massages, an indoor pool, a hot tub and saunas. With a beautiful view of the nearby Brijuni islands, the imposing infinity pool which is around 60 metres long is perfect for a hotel which will soon reach the very top of the tourist map of Croatia.
For more, check out our travel section.
May the 7th, 2022 - There are two types of Brit in Croatia. No, not ethnically, but politically. Back in 2016, the United Kingdom of Great Britain and Northern Ireland very narrowly voted to leave the European Union (EU) in a non-binding referendum, the likes of which are not the norm at all in a democracy of the UK's type.
Split almost entirely down the middle, the vote to leave the EU came as an enormous European and global shock, sending pound sterling tumbling and causing turmoil following over 40 years of the UK being one of the first and indeed among the wealthiest and most powerful member states. I won't get into the multitude of issues surrounding the Brexit vote, as more than enough time has passed for certain aspects of it to become clear, we've all read about them, and that isn't the point of this article.
Article 50 was eventually triggered, an article which enables a country to leave the bloc and which, according to its creator, was never really designed to be used as such a move was deemed deeply unlikely to ever happen. The UK ended up having numerous extensions, or Brextensions if you will, prolonging the exit process and seeing the country remain a member state for significantly longer than was initially envisaged.
The end eventually came, and the country entered into a year long transition period during which all EU law continued to apply to the UK, which included freedom of movement, one of the fundamental pillars of the functioning of the European Union. The transition period, which was spent tying up loose ends and seeing additional agreements and arrangements dealt with, ended on December the 31st, 2020, with new rules coming into force on the 1st of January, 2021. That date automatically created two sets of British nationals; those who had exercised their right to freedom of movement when the UK was an EU member state, and those who hadn't.
What does that mean for a Brit in Croatia?
Put simply and shortly, there are now two types of Brit in Croatia - a pre-Brexit Brit and a post-Brexit Brit. These two sets of people are treated entirely differently in this country, should they live here or want to live here, despite having the exact same nationality.
New residence permits
As a pre-Brexit Brit, you're not a third country national, and you're not an EU citizen, you have a category all to yourself, but it is up to you to be able to demonstrate that.
First of all, you need to request a new residence permit which separates you as a a pre-Brexit Brit in Croatia from a post-Brexit Brit. This card will state that you are protected by the Withdrawal Ageeement and you can request it from MUP. This is not a new residence application, just a scheme of declaration. You were supposed to request this before the end of June 2021 but some still haven't. You can still request it, your rights under the Withdrawal Agreement will be unaffected, but you may face an administrative fine for not respecting the aforementioned date (around 200 kuna). You can read more here.
For those who had temporary residence before the 31st of December, you need to download and fill in this form.
For those who already had permanent residence before the same date, you need to download and fill in this form.
Those who are already permanent residents will be asked less questions than those who are temporary residents. This is because permanent residents, regardless of their nationality, no longer need to abide by any conditions in order to live in Croatia permanently. Temporary residence are still ''provisional'', so to speak.
The rules for pre-Brexit Brits in Croatia:
If you're a Brit in Croatia and you were granted legal residence here before Brexit occurred, you're covered by something called the Withdrawal Agreement. That agreement provides what are known as acquired rights for those British citizens who had exercised their right to free movement when their country was an EU member state and as such moved to Croatia before the clock timed out on the 31st of December, 2020.
It's important to note that the ''pre-Brexit'' type of Brit in Croatia's time period also includes the transition period during which all EU law continued to apply to the UK.
As a pre-Brexit Brit in Croatia, you're afforded a series of special rights which clearly distinguish you from post-Brexit Brits (which we'll get into later) and see you treated much more like an EU citizen than a third country national.
The ins and outs
As a pre-Brexit Brit in Croatia, you had temporary or permanent residence granted and a document/permit to prove that before Brexit was concluded, when you were an EU citizen. As such, you'll continue to be broadly treated as such. This means that:
You are free to continue living and working (if you worked) as you did before, under the same conditions as you did before,
You are free to be self-employed or take up another form of employment without the need for a work permit,
You can continue to receive healthcare from the state (through HZZO) on the same basis as you did before,
You will be exempt from needing to fill out and pay for an ETIAS (European Travel Information and Authorisation System) when it comes into force,
You can enter and exit Croatia with your valid passport. You don't need any additional validity on the passport beyond the dates on which you're travelling,
Your entry into Croatia is always facilitated, but you must proactively show your residence permit demonstrating your rights along with your passport when entering. Your passport may be mistakenly stamped, but this is voided upon demonstration of your right to live in Croatia,
You can continue to drive in Croatia and will be issued with black printed license plates which separate you from post-Brexit Brits. You should bring your new residence permit proving your status when undertaking this procedure with MUP,
Your family members (such as current spouses and registered partners, parents, grandparents, children) will be able to join you and live in Croatia at any point the future,
Any children born after the end of the transition period will also be protected by the Withdrawal Agreement because you are, wherever they are born,
You can be gone from the country for five consecutive years without losing any of your rights or your permanent resident status,
All in all, your rights are largely unaffected by Brexit and you can continue living permanently in Croatia without the need to meet any conditions,
If you'd like to see more details about travel restrictions as a Brit in Croatia covered by the Withdrawal Agreement, click here.
Let's now move onto post-Brexit Brits, the British nationals who moved to Croatia, or who still plan to, now that Brexit and the transition period have come to an end. These British citizens are third country nationals, as despite being a European country, the UK is no longer an EU, EEA or EFTA member state.
The rules for post-Brexit Brits in Croatia:
As a Brit in Croatia who did not exercise their right to free movement when the UK was an EU member state, you are not afforded any special rights. You can no longer get residence easily as a British citizen like you could when the UK was part of the EU. Let's look at how you can gain residence as a Brit in Croatia now that EU membership is a thing of the past. You can apply for residence in Croatia if:
You're a British national but you already hold permanent residence in another EU/EEA/EFTA country
You're a digital nomad
You're a student in Croatia
You're coming here to start a company of your own
You're going to be working for a Croatian company
You're going to be undertaking scientific research
You're coming here to learn the Croatian language
You are already married or are going to be getting married to a Croatian citizen or an EU citizen living here
You're going to be volunteering here
You want to live here for one year only and you can prove the pre-payment of a year's worth of rent on a house, apartment, etc
All of the above grounds for application come with their own rules and requirements, and frankly, I'd be here for forever and a day if I went through each and every possible requirement and potential twist and turn. That said, these are concrete grounds for a residence application for a post-Brexit Brit in Croatia, and if you state one of them as your reason, MUP will be able to tell you what they require from you in your individual case. Here's what you will need in each and every case, however:
A completed application form for temporary residence which MUP will provide you with,
A valid identity document such as an ID card or British passport. Brits know that ID cards aren't really a thing in the UK, so the latter will most likely be the case. You must have three or more months longer on your passport than the period you intend to remain in Croatia for,
A criminal background check from the British police that is no older than 6 months, and if you hold permanent residence in another EU country, you need one from their authorities, too,
A health insurance policy. You can use a private health insurance police, a GHIC, or an EHIC if you live in another EU country and have health insurance there,
Proof of accommodation, and as such a registered address in Croatia. You'll then need to show your proof of ownership, a valid rental contract, or the accommodation provider/landlord can accompany you to MUP if you have a different situation,
Proof of sufficient funds to support yourself unless you're applying based on family reunification with a Croatian spouse,
A photograph (30x35 mm) which will either be taken at MUP upon approval of your application, or at a nearby photo studio which provides photos for identification documents. There are usually several such facilities within walking distance from an administrative police station,
An application fee to be paid into the Croatian state budget,
Your rights as a post-Brexit Brit in Croatia:
You will require a work permit in order to gain lawful employment in Croatia,
As a temporary resident, you will need to be in the country for a certain amount of time each year before being able to apply for permanent residence. Click here for travel restrictions for third country nationals, and for detailed information about time you must wait before you can apply for permanent residence, click here,
You may need to get your professional qualifications recognised if you want to work in a profession that is regulated in Croatia,
If you plan to study in Croatia, you must meet all of the requirements before you travel here. It's wise to contact the relevant higher education provider in Croatia to check what fees you may have to pay during this process,
The UK has a double taxation agreement with Croatia so that you don't pay tax on the same income in both countries. This remains the case regardless of the EU or of Brexit,
You can't renew or replace your United Kingdom, Gibraltar, Jersey, Guernsey or Isle of Man licence if you live in Croatia, but here's what you can do,
Once you are able to apply for permanent residence, you will be afforded vastly different (and much more favourable rights) which are very similar to those enjoyed by nationals, here they are:
You are free to come and go from Croatia as often as you please, as long as you aren't outside of the country's borders for longer than two consecutive years,
You are free to access education,
You can undergo professional development of any kind,
You are free to take up employment without any need for permission or a work permit
Student (but not state) scholarships,
Child benefits (allowance),
Social/state benefits (welfare)
Various forms of applicable tax relief,
Free access to the goods and services market,
The freedom to become a member of an association or organisation which represents either employees or employers,
You can live in Croatian permanently and without any conditions,
SOURCES: MUP, Sredisnji drzavni portal, Europa.eu, GOV.UK
For everything else you need to know as a Brit in Croatia, keep up with our lifestyle section.
ZAGREB, 6 May (2022) - The main Zagreb Stock Exchange (ZSE) indices ended the week in red, with the Crobex falling by 0.92% to 2,110 points and the Crobex10 by 0.87% to 1,257 points.
Turnover at the close of the trading session was HRK 10.8 million, about 2.3 million higher than on Thursday. An additional HRK 4.9 million was generated by a block transaction with the Atlantic retail group stock at HRK 1,620 per share.
The Atlantic Group stock also generated the highest turnover in the regular session, of HRK 1.74 million. Its price remained stable at HRK 1,640.
Three more stocks passed the turnover mark of one million kuna.
The Span IT company turned over HRK 1.22 million, closing down 0.82% at HRK 243 per share.
The Valamar Riviera hotel company turned over HRK 1.06 million, ending the day at HRK 34.7 per share, down 2.53%.
The HT telecommunications company turned over HRK 1.05 million. Its price dropped by 0.81% to HRK 182 per share.
Forty-one stocks traded today, with eight of them increasing, 22 decreasing and 11 remaining stable in price.
(€1 = HRK 7.545685)
For more, check out our business section.
ZAGREB, 6 May (2022) - Vinistra, Croatia's largest and oldest regional wine fair, opened in the northern Adriatic town of Poreč on Friday, with more than 110 exhibitors, including 80 winemakers, taking part.
"Istria County has been financially supporting Vinistra since its very beginning because wine and winemaking are part of our tradition and regional identity. Today we can proudly say that Istria is a world brand, both for our wines and our olive oil," said Istria County Prefect Boris Miletić.
The State Secretary at the Ministry of Agriculture, Šime Mršić, underscored the importance of the fair for the promotion of wine, while the head of the Vinistra association, Nikola Benvenuti, confirmed that the interest of exhibitors had never been higher.
Among the participants in this year's edition of Vinistra are the international partners on the project "The Malvasia Myth", which aims to valorise and brand all wines carrying the name Malvasia and to promote their areas and producers.
As a partner in the project, the local action group Central Istria will host, in cooperation with the Vinistra association, representatives of the partners from Greece and Italy and acquaint them with the area and the characteristics, development and importance of Malvasia in Istria County. The partners will present their wines at the Vinistra fair.
For the first time, Vinistra will also feature a stand dedicated to evaluation, the World of Malvasia, where visitors will be able to taste Malvasia wine from ten countries with guided tasting in cooperation with the Croatian sommelier club.
For more on travel in Croatia, follow TCN's dedicated page.
ZAGREB, 6 May (2022) - Prime Minister Andrej Plenković said on Friday that euro introduction would be positive for Croatia and would enable it to weather challenges better and more easily.
Opening a government session, the PM said that the National Council for euro introduction held a session on Wednesday, stressing that he expected the parliament to adopt the relevant law.
"I believe that membership in the euro area is a benefit in a crisis as serious like the current one, and that it will help us weather the future challenges better and more easily," he said.
He said the government would also formulate changes to the Government Act, announced at the start of the second term.
"We will propose, as one of the measures to step up the fight against corruption, stripping of immunity any government member for crimes of corruption that are prosecuted ex officio," he said.
He added that the government would also formulate a code of conduct for government officials.
For more, check out our politics section.
ZAGREB, 6 May (2022) - Addressing a traditional conference of regional central bank governors in the northern Adriatic town of Rovinj on Friday, Croatian National Bank (HNB) Governor Boris Vujčić said that all central banks have revised down their growth projections for this year and that inflation has not yet reached its peak.
Last month, the HNB revised its growth projections for this year, forecasting real GDP growth of 3.2%, down from its previous projection of 4.1%, on the assumption that the war in Ukraine does not last long and energy prices gradually return to normal.
The HNB estimates that inflation would average 5.4% in 2022, after reaching 2.6% in 2021.
The government recently also revised its growth forecast for 2022 from 4.4% to 3.0% and an inflation rate of 7.8%.
"At the moment consumption is still good. We haven't seen it slow down. Inflation will continue to increase and this isn't the peak yet. We are still waiting for April figures. What will happen later depends on the development of the war. However, the war has not had much of an impact on us as yet. Nevertheless, the longer it lasts the deeper the cumulative effects will be," Vujčić said in his address to the conference of regional central bank governors, organised by the Lider business weekly.
He added that when inflation increases above 5.0% it starts to affect expectations and spreads among more and more groups of products. In Croatia we have witnessed an increased number of products whose price has increased by more than 5.0%, he said.
"We cannot make any real forecasts and everything depends on energy prices. However, the inflation has nothing to do with the adoption of the euro as legal tender, as other factors are affecting price trends more," he said.
The regional bank governors talked about the repercussions of the conflict between Russia and Ukraine and the resolution of Sberbank, with Vujčić saying that even though Croatia is the youngest EU member state it managed to convince Brussels of a resolution plan outlining what should be done with subsidiary banks if the "mother bank goes into liquidation."
"Sberbank turned out to be a good precedent for future cases in Europe and there will certainly be more," Vujčić noted.
North Macedonia's central bank governor Anita Angelovska Bezhoska said that Europe expects slower growth this year and next.
Bosnia and Herzegovina's Senad Softić said that his country needs to revise some parameters due to the war and inflation but that the banking sector in Bosnia and Herzegovina is stable.
Slovenia's central bank governor Boštjan Vasle said that the Slovenian economy grew faster than the European average due to its milder epidemiological restrictions during the pandemic. He said that the two main growth drivers were exports and increased consumption. "Our current forecast is not that optimistic, but consumption is still strong," he added.
Adrović: Intensive preparations to introduce euro currency
The President of the Croatian Banking Association, Zdenko Adrović, said that Croatia is intensively preparing for the introduction of the euro.
"The threatening inflation and potentially increased interest rates raise new issues for monetary policies and banks. But that is not all because all this is happening when Croatia is intensively preparing to introduce the euro as legal tender. Banks have a huge role in the entire process and that is why it is the main issue this year," Adrović said, adding that the time frame was too short.
"Croatia will become a state with the shortest deadline to introduce the euro since joining the ERM II mechanism."
The good news is that prices in the country are already tightly connected with European prices, hence entry to the euro area is a logical economic and political choice for the country that is largely eurorised anyway, Adrović said.
For more, check out our politics section.