ZAGREB, October 30, 2019 - In September 2019, Croatia's industrial production went up 2% on the year, while in the first nine months of the year it increased 1%.

Industrial production in September 2019, as compared to August 2019, increased by 2.5%, the national statistical office said on Wednesday.

Raiffeisebank Austria (RBA) analysts noted that the industrial production volume in August 2019 dropped 1.7% on the year and that September's growth was in line with their expectations.

In September 2019, as compared to September 2018, durable consumer goods increased by 19.1%, non-durable consumer goods by 4.4%, energy by 3.4% and intermediate goods by 0.5%, while capital goods decreased by 7.1%.

Over the first nine months of 2019, the most significant component of industrial production, the manufacturing industry, rose only 0.5% on the year.

RBA analysts said they expected that indicator to be volatile in Q3 but they maintain that the volume will record a positive rate for 2019. Domestic demand will stay strong, while the slowing of Croatia's main trade partners and the still low competitiveness will limit stronger growth, with the growth rate for 2019 remaining 1.5%, they added.

In September 2019, the retail trade turnover went up 3.5% on the year, after rising annually by 1.2% in August, 3.7% in July and 5.9% in June, the national statistical office said on Wednesday.

In the first nine months of 2019, the working-day adjusted retail trade turnover in real terms increased by 3.7% compared to the same period of the previous year.

Real annual retail trade growth in September 2019 was the fourth in a row after May, when it fell 1.9%, for the first time in 56 months.

The retail trade turnover of food, beverages and tobacco increased by 2.3% and of non-food products (except of automotive fuels and lubricants) by 7.7%.

In September 2019, eight of ten trade branches, which generated 75.8% of the total turnover, realised a rise in turnover. Accordingly, the total gross retail trade turnover increased by 4.1% in nominal terms, as compared to the same month of the previous year.

The largest impact on the rise in the nominal turnover in September 2019, as compared to the same month of the previous year, according to gross, unadjusted indices, was realised by non-specialised stores with food, beverages and tobacco, with 3.1% of turnover growth and 1.1% of the impact on the total turnover index, and other non-specialised stores, with 16.5% of turnover growth and 1% of the impact on the total turnover index.

More economic news can be found in the Business section.

ZAGREB, October 27, 2019 - In 2018, Croatia imported 1,797 tonnes of cut flowers, and the value of this import stood at 9.9 million euro, thus rising by 19.5% in comparison to 2017, the Croatian Chamber of Commerce (HGK) has reported.

The lion's share of the imports came from the Netherlands, 1,687 tonnes worth 9.1 million euro.

The HGK explains this with the largest trade on the Amsterdam flower market.

The flower imports from Slovenia weighing 45 tonnes cost 435,000 euro in 2018. Germany was the third biggest exporter of flowers to Croatia, 32 tonnes worth 153,000 euro.

In 2017, Croatia imported 1,555 tonnes of cut flowers and the worth of those imports stood at 8.3 million euro, dropping by 8.5% in comparison to 2016.

Broken by type of flowers, roses were the most imported flowers last year, with 789 tonnes worth 4.8 million euro. Chrysanthemums followed, with 196 tonnes worth 981,000 euro.

Croatia's share in the flower production in the European Union stands at a mere 0.5%.

Currently, flowers are grown on only 300 hectares, which is not sufficient to cover domestic needs.

At the end of October and at the beginning of November, when Croatia observes All Saints' Day, November 1, as a public holiday, many Croatians visit cemeteries to lay flowers and light candles on graves of their family members and friends.

Therefore, the import of flowers increases every October by about 50 tonnes, and chrysanthemums are on demand.

Thus, in 2018 Croatia's imports of grave candles and lanterns increased to more than 3,188 tonnes, worth 6.7 million euro.

In the first seven months of this year, Croatia imported 1,079 tonnes of grave lanterns, worth 2.5 million euro.

The main countries that export candles to Croatia are Poland and Germany.

On the other hand, Croatia's exports of candles totalled 1,067 tonnes, worth 2.3 million euro, last year.

In the first seven months of 2019, the exports reached 241 tonnes in the value of 605,000 euro. The main markets for Croatia's candle exports are Hungary and Slovenia.

More economic news can be found in the Business section.

ZAGREB, October 23, 2019 - Finance Minister Zdravko Marić said on Wednesday that the budget for next year, which the government is expected to put forward next week, would be balanced regardless of the announced increase in the base pay for government and public sector workers, but he would not say if the job complexity index for education workers would be increased.

The minister said the government was working on a budget that included a 6.12% increase in the base pay of government and public sector employees, to be implemented in three rounds.

He noted that the increase would be compensated for by giving up on the planned reduction of the standard 25% VAT rate to 24%.

The pay increase will not reflect on the public debt or the budget's balance, Marić said.

Asked if he was satisfied with savings made in some sectors, he said that he was satisfied with the overall fiscal policy results.

Asked if teachers who are striking because of dissatisfaction with their wages and the government's wage policy for the public sector, could count on an increase in their job complexity index before the adoption of the budget for next year, the minister said: "We'll see", adding that the government had raised the base pay by 18% and that by the end of its term that increase could exceed 20% with tax reliefs.

He admitted that there was dissatisfaction with the regulation on job complexity indices and that the matter should be analysed.

Last week, the minister said that the announced increase in wages for government and public employees would cost annually between 1.1 and 1.2 billion kuna.

Speaking of tax reliefs, he said that measures such as raising the non-taxable income would increase the number of employees whose income was not taxed by 75-80,000 and that currently the income of 1.7 million people was not taxed.

The financial effect of raising the non-taxable income would amount to 500 million kuna, the minister said, adding that that money would remain in taxpayers' pockets. As for the fact that the amount would be lost on local government units, Marić said that compensation measures would be defined for local government units, which have income tax as one of the main sources of their income.

Postponing the reduction of the VAT rate by one percentage point will leave between 1.7 and 1.8 billion kuna in the state budget, the minister said.

More budget news can be found in the Business section.

ZAGREB, October 23, 2019 - The government can support exporters and enterprises by reducing para-fiscal charges and by offering financial schemes for improvement energy efficiency in industry, Environment and Energy Minister Tomislav Ćorić said at a convention of exporters organised by the Lider business weekly newspaper.

Minister Ćorić says that Croatian exporters are faced with a series of challenges, some of these being an increasing cost of labour and electricity which is something the state cannot influence to any great degree. However, the authorities can reduce para-fiscal charges, which it is already doing, he added.

He recalled that currently a new model for paying charges for renewable energy sources (OIE) is being implemented which should relieve large consumers in the energy intensive industry sectors. This is at the final stage of negotiations with the European Commission and the cutting costs can range between 80%, 60% and 40%.

Ćorić said that the ministry had provided 495 million kuna in subsidies over the past two years to stimulate energy efficiency in industry.

In his comment on repeated complaints by exporters that the kuna currency is too strong, the minister said that a strong kuna has become an alibi for failure because it has been strong since 1994 while on the other hand since then to date, we have had a "unbelievable stable exchange rate."

Asked about the possibility of Volkswagen coming to Croatia, Ćorić said that he did not personally participate in those talks however he believes that a move like that would mean a lot to Croatia's industry and import sector.

If talks in that regard have commenced, everything will be done for that investment to be achieved, Ćorić said.

Marinko Došen, of the AD Plastik Group that manufactures car plastic parts said that the possibility of Volkswagen coming to Croatia depended on what concessions it would be offered and that statements by Economy Minister Darko Horvat were encouraging in that regard. The figures show that for every employee in the automobile industry there are at least seven employed in the entire infrastructure and supply industry, Došen underlined.

He believes that the arrival of Volkswagen would be an excellent boost for Croatia's economy. Volkswagen is one of AD Plastik's buyers and the arrival of that German giant would open the opportunity to finally sell something on the local market.

Croatia is going into the fight for an investment worth over a billion euro, which is how much German car maker Volkswagen plans to invest in a new factory, Večernji List daily said on Tuesday, citing sources at the Ministry of the Economy.

The Germans planned on building the factory in Turkey but ditched the plan over Ankara's military offensive in Syria, Večernji List says, adding that, according to well-informed sources, Croatia will be included in a new round of talks between Volkswagen and the interested countries, namely Serbia, Bulgaria and Romania.

Volkswagen plans to produce 300,000 vehicles annually and employ 4,000 people in the new factory, the newspaper says.

More economic news can be found in the Business section.

ZAGREB, October 23, 2019 - Finance Minister Zdravko Marić said after a three-hour meeting of the ruling coalition on Tuesday evening that the coalition was agreed that the budget and public finance framework for next year was good and should be maintained.

"We are all agreed, I believe that all members of the coalition and the parliamentary majority agree that the budget and public finance framework for next year is good and should be maintained," said the minister.

The ruling coalition discussed at its meeting a budget revision for this year, the 2020 budget and the fourth round of the tax reform.

Asked if there was room in the budget to increase wages as much as striking teachers' unions wanted, Marić said: "We must be very clear, you are aware of the restrictions for next year's budget, we have to stick to them. The overall framework is sustainable and we are not bringing it into question. It is a question whether there is additional room for additional increases. Everything should be in line with possibilities."

Asked again if this meant that the six percent wage increase offered to teachers was the government's maximum offer, the minister said: "That's right".

As for an increase in the minimum wage announced by Prime Minister Andrej Plenković earlier in the day, Marić said he did not have any specifics and that they would be known after a government session.

He said that the dialogue on the budget and taxes would continue in the coming days, and that the related legislation should be formulated by the government next week and then forwarded to the parliament in the first half of November.

The minister said that the government spent as much as it earned and that any surplus would be directed into the business sector.

The minister also said that he believed the Croatian People's Party (HNS), a junior partner in the ruling coalition, would support the budget.

As for criticism from Milan Bandić, the mayor of Zagreb and leader of the Labour and Solidarity Party, which is part of the parliamentary majority, that local government units would again lose a lot in the fourth round of the tax reform, Marić said that that would be discussed at a later stage.

He said that the government was not giving up on measures for young people and would put them forward as planned.

More budget news can be found in the Business section.

ZAGREB, October 22, 2019 - A total of 1.56 million people in Croatia were gainfully employed at the end of September 2019, which is 10,899 persons or 0.7% fewer than in the previous month, while the registered unemployment rate fell to 6.7% from 6.8% in August, according to data from the National Bureau of Statistics (DZS).

Compared with September 2018, the number of people in work was 0.9% higher.

Data from the Croatian Employment Service (HZZ) show 112,376 people were registered with the HZZ at the end of September 2019, down by 1.9% from August 2019 and by 13.9% from September 2018.

The registered unemployment rate, calculated as a share of unemployed people in the total active population, was 6.7% in September, compared with 6.8% in August.

The volume of construction work carried out in Croatia in August 2019 was 3.5% higher than in August 2018 and 1.1% lower than in July 2019, the National Bureau of Statistics (DZS) says.

The volume of construction work on buildings increased by 4% year on year, while the volume of work on other civil engineering structures, such as roads, railways, pipelines, dams and sporting grounds, rose by 2.6%.

Compared with July 2019, construction work fell by 0.4% on buildings and by 2.6% on other structures.

More economic news can be found in the Business section.

ZAGREB, October 21, 2019 - Croatia recorded a consolidated general government budget surplus of 992 million kuna in 2018, which is 0.3% of GDP, which is the second year in a row that a budget surplus was generated while the public debt to Gross Domestic Product (GDP) was reduced to 74.8%, according to the revised figures released on Monday by the National Bureau of Statistics (DZS).

The report on the Excessive Deficit Procedure and general government debt to GDP released on Monday indicates a consolidated general budget surplus in 2018 of 992 million kuna or 0.3% of GDP whereas in 2017 it was 2.9 billion kuna, or 0.8% of GDP.

The latest data has been revised up from the April report when DZS reported that the consolidated general budget surplus for 2018 amounted to 758 million kuna or 0.2% of GDP.

The biggest impact on the amount of 2018 surplus was due to the further fall in the government budget balance compared with the previous year from 2.29 billion kuna to 192 million, as a result of positive economic developments, DZS's report said.

The 2018 surplus was mostly driven by the considerably improved financial result of extrabudgetary beneficiaries and public companies and by increased tax revenues.

In 2018, taxes on production and imports totalled 76.7 billion kuna, an increase of 7.2% on the previous year.

Investments also grew, increasing by 13.36 billion kuna or 32.6% more than in 2017. The surplus is also the result of a decrease in interest rates, and interest expenses amounted to 8.89 billion kuna or 9.1% less than in 2017.

At the end of last year, consolidated general government debt was 286.1 billion kuna, or 74.8% of GDP, while in 2017 it was 285.84 billion kuna, or 78% of GDP. That is its lowest level since 2012 when it accounted for 69.4% of GDP.

More economic news can be found in the Business section.

ZAGREB, October 16, 2019 - EU retail trade is growing, boosted by price growth, while sound quantity growth is spurred by Eastern Europe, including Croatia, a conference organised by the Croatian Chamber of Commerce (HGK) and Suvremena Trgovina magazine was told in Zagreb on Wednesday.

"Retail trade growth is generated solely by price growth. The three percent growth in the second quarter of 2019 was due to price growth, while quantity growth, which indicates the health of retail trade, is stagnating in Europe," said Jelena Doko Cetina, commercial leader at the global data analytics company Nielsen.

She noted that the stagnation was coming from Western European countries, where people were increasingly turning to food consumption away from the home, while Eastern Europe, including Croatia, was recording retail sales growth.

"Globally, we can say that consumers are feeling optimistic. The situation in Europe is slightly more realistic, as we are slightly more inclined to pessimism, primarily because we are more cautious with our finances," Doko Cetina said.

The HGK vice-president for trade and finance, Josip Zaher, said that in the first eight months of 2019 retail trade in the EU grew by 2.7 percent on average compared with the same period last year, while Croatia recorded a rise in retail trade of 5 percent.

Mario Antonić, state secretary at the Ministry of Economy, Entrepreneurship and Crafts, said that accession to the European Union had given Croatia great opportunities as well as great competition which in turn brought about many challenges. "There is no longer a national, but only a global market," he said.

More economy news can be found in the Business section.

ZAGREB, October 15, 2019 - The International Monetary Fund (IMF) has revised upward the projection of Croatia's real Gross Domestic Product for this and next year, saying that Croatia's GDP growth in 2019 is likely to be twice as strong as the growth of a group of countries which the Washington-based fund calls "Emerging and Developing Europe".

Croatia's economic growth is projected to revive to 3% in 2019, according to the IMF Winter Economic Outlook (WEO), which is 0.4 percentage points higher than the Fund's estimate released in April.

In 2020, Croatia's economy is expected to grow by 2.7%, which is 0.2 percentage points more than in the previous projection.

The IMF also estimates that Croatia's economy grew by 2.6% in 2018, which is 0.1 percentage point lower than in its previous forecast.

Croatia's economic growth of 3% in 2019 is twice as high as the projection for "Emerging and Developing Europe" which, apart from Croatia, includes Russia, Turkey, Poland, Romania, Ukraine, Hungary, Belarus, Bulgaria and Serbia.

The aggregate economic growth of that group is estimated by the IMF at 1.8% in 2019, and in 2020 the group's growth rate is set at 2.5%.

The main reason for the slower economic growth in "Emerging and Developing Europe" is Turkey's economic stagnation this year, which neutralises Hungary's 4.6% growth projection and Poland and Romania's growth projection of 4%.

The IMF also projects Croatia's unemployment rate of 9.0% this year to further fall to 8% in 2020, after it stood at 9.9% in 2018.

Croatia's consumer prices index is put at 1% in 2019 and 1.2% in 2020.

Croatia's current account balance surplus, expressed as a percentage of GDP, stands at +1.7% and +1% in 2020, after it stood at +2.5% in 2018.

More GDP growth news can be found in the Business section.

ZAGREB, October 14, 2019 - Croatia recorded the sharpest monthly decline in industrial production in August, while the European Union observed a slight recovery, the EU statistical office Eurostat said on Monday.

In August 2019 compared with July 2019, seasonally adjusted industrial production rose by 0.1% in the EU28 and by 0.4% in the euro area. In July 2019, industrial production fell by 0.1% in the EU28 and by 0.4% in the euro area.

The highest monthly increases in industrial production were registered in Malta (+5.6%), Estonia (+3.9%) and Latvia (+3.0%), while the largest decreases were observed in Croatia (-3.0%), Slovakia (-2.6%) and Lithuania (-2.4%).

Broken down by main industrial grouping, in the EU28, production of energy and non-durable consumer goods fell the most, by 0.6% respectively. In the euro area, the largest declines were observed in the production of durable consumer goods and energy, of 0.4%.

In August 2019 compared with August 2018, industrial production in the EU28 decreased by 2.0%, its largest drop since December 2018. In July 2019 it declined by 1.2% year on year.

At the same time, industrial production in the euro area fell by 2.8%, its sharpest decline since the end of last year. In July 2019 it fell by 2.1% year on year.

The largest decreases were registered in Slovakia (-8.1%), Ireland (-6.2%) and Romania (-6.1%), while the highest increases were observed in Malta (+7.4%), Denmark (+6.6%) and Finland (+4.5%).

In Croatia, industrial production in August 2019, compared with August 2018, fell by 1.7%, while in July 2019 it rose by 2.9% year on year.

Broken down by main industrial grouping, energy production declined the most, by 3.0% in the EU28 and by 3.3% in the euro area. In both areas only production of durable consumer goods increased, by 0.8% in the EU28 and by 0.4% in the euro area.

More economy news can be found in the Business section.