ZAGREB, October 9, 2019 - Croatia's commodity exports in the first eight months of 2019 totalled 74.1 billion kuna, up 5.8% on the year, while imports went up 5.9% to 123.5 billion kuna, the national statistics office (DZS) reported on Wednesday.

The foreign trade deficit was 49.4 billion kuna, 2.8 billion kuna higher than in the same period last year. The export-import rate dropped from 60.1% to 60% year-on-year.

Commodity exports to EU member states in the period from January to August totalled 50.1 billion kuna, up 4.6% on the year, and HRK 24 billion to non-EU countries, up 8.5%.

Commodity imports from EU member states increased by 9.1% to 99.6 billion kuna while at the same time imports from non-EU countries decreased by 5.7% to 23.9 billion kuna.

Expressed in euro currency, Croatia's commodity exports in the first eight months of 2019 totalled a little more than 10 billion euro, up 6% year-on-year while imports increased at that same rate to 16.7 billion euro.

The foreign trade deficit stood at 6.7 billion euro, up from 6.3 billion euro in the first eight months of 2018.

Commodity exports to EU member states amounted to 6.8 billion euro, up 4.8% on the year, and 3.2 billion euro to non EU countries, up 8.6%.

The value of commodity imports from EU member states increased by 9.3% to 13.4 billion euro, while imports from non-EU countries fell by 5.6% to 3.2 billion euro.

More economic news can be found in the Business section.

ZAGREB, October 1, 2019 - The Croatian National Bank (HNB) on Monday presented a revision of statistics on relations with foreign countries, which reveals an increase in gross foreign debt in the period from 2000 to 2018, most of which happened at the end of 2018, in the amount of close to €3.9 billion, and a decrease in the current account balance of payments in all the years since 2002, ranging from €21 million to 974 million.

In line with the revision practice of euro area member-states, in 2019 a major revision of statistics of relations with foreign countries was undertaken, which primarily refers to data on the balance of payments, the state of international investments, as well as data on foreign debt, HNB vice-governor Roman Šubić said.

Major statistical revisions are done every five years, and the most important improvements refer to data on tourism revenues and their impact on the balance of payments, to the inclusion of informal worker remittances, imports of vehicles from the EU by natural persons, as well as trade credits with the maturity period of up to six months, i.e. deferred payment.

In line with the new methodology, historical data were revised as well, in some segments back to the year 2000, HNB officials said.

The revision of data on gross foreign debt reveals an increase in debt in all the years since 2000, in the range of about €1.3 billion to 3.9 billion.

That growth was mostly due to the inclusion into foreign debt of trade credits, i.e. credits which companies or suppliers grant to Croatian buyers borrowing abroad, for the purchase of their goods and services, with a maturity period of six months.

An HNB analysis shows that the situation in the period from 2016 to 2018 was undervalued by 17-21% on the expenditure side, that is, when a buyer from the country buys a product or a service abroad with a maturity period of six months.

The central bank's revised data show that gross foreign debt at the end of 2018 totalled €42.7 billion, €3.9 billion more than according to the old methodology (€38.8 billion).

Data for 2019 show a further increase in foreign debt, which at the end of the second quarter amounted to €44.6 billion.

The revision found that the amount of tourism revenues in the balance of payments was overestimated, primarily due to the estimated number of foreign tourists visiting Croatia. The new calculation of tourism revenues uses methods based on a combination of physical indicators and indicators of average spending by foreign tourists.

The revision of data from 2003 revealed a decrease in revenues from foreign tourists by between €500 million and 1.1 billion, which has had a negative impact on the current account balance. The new data for 2018 show that revenues from foreign tourists were €600 million lower, reaching €9.5 billion, while according to previous, unrevised data they amounted to €10.1 billion.

Šubić says that there has been a change to the data collection methodology, adding that data from the State Bureau of Statistics were used before, while now far more detailed data from the Ministry of the Interior are used.

"These data track the number of foreign tourist arrivals. The possibility of monitoring the number of vehicles entering the country makes is possible to estimate the number of passengers per vehicle and ensure better statistics," he said.

Explaining the method now used to calculate tourism revenues, he said that the estimated number of foreign visitors is multiplied by their average spending.

Also included in the balance of payments are informal worker remittances because it was noticed that Croatian workers returning home from abroad used informal channels for money transfers. As a result of their inclusion, the current account balance increased by between €174 million and 326 million.

The revision also covered changes in used car imports from the EU by natural persons. Previously, official statistics covered only car imports conducted by legal entities, which had a negative impact on the current account balance ranging from €41 million in 2013 to €317 million in 2018.

Šubić said that it was in everyone's interest to have as accurate and comprehensive statistics as possible that could be comparable on an international level.

More economic news can be found in the Business section.

ZAGREB, September 27, 2019 - The sentiment in the Croatian economy improved more significantly in September owing primarily to confidence in the services and retail trade sectors, while in the EU and the euro area a marked worsening was recorded, shows the European Commission's regular monthly report released on Friday.

Croatia's Economic Sentiment Indicator (ESI) in September is four points higher than the indicator for July, and stands at 114.7 points. In August it dropped by 1.7 points.

Expectations in September grew the most in the services sector, by 8.1 points to 24.9 points. The services sector was followed by the retail trade sector, where confidence grew by eight points to 11.6 points.

More optimistic were also business people in the industry sector, as evidenced by an increase of confidence of 3.1 points to 8.2 points.

Consumer confidence improved slightly less than in July, going up 1.1 points to minus 3.4 points.

The construction sector was the exception, where confidence fell by 4.8 points to 15.8 points.

At the EU level, the ESI dropped by 1.4 points to a long-term average of 100 points. It thus continued a downward trend that started in June, shows the EC report.

The decline was mostly due to a dropin confidence in the industry and construction sectors, of 3.5 and 3 points respectively.

The ESI in the euro area was down by 1.4 points in September to 101.7 points. In August it rose 0.4 points.

The decline was mostly due to a major decline in business confidence in the industry sector, which dropped by three points.

More news about Croatian economy can be found in the Business section.

ZAGREB, September 22, 2019 - Demand for new cars in Europe dropped in the first eight months of 2019 as its weakening in the leading Western European markets prevailed over the mild increase in new EU member states, including Croatia, according to the European Automobile Manufacturers' Association (ACEA).

Over the first eight months of 2019, new-car demand in the EU went down by 3.2% compared to the same period last year, counting 10.5 million registrations in total.

Demand for new cars decreased in five leading automobile markets, including France, Great Britain, Italy and Spain, while rising 0.9% in the biggest market, Germany.

In old member states, those prior to the 2004 enlargement, demand dropped 3.6%, while in new ones it went up 1.2%.

In Croatia, 47,824 new cars were registered over the first eight months of 2019, up 1.4% on the year.

Broken down by manufacturer, Volkswagen held the largest share in Europe over the first eight months of this year (24.8%), followed by PSA (16.4%) and Renault (10.7%).

During August, the EU passenger car market contracted by 8.4%. This is mainly the result of the high base of comparison, as August 2018 saw exceptional growth (+31.2%) ahead of the introduction of the new WLTP emissions test on 1 September 2018. The top five EU markets all recorded decreases, with the strongest drops in Spain (-30.8%) and France (-14.1%).

In Croatia, 3,403 new cars were registered in August, up 6.7% on the year.

In July 2019, demand for new passenger cars increased by 1.4%, with almost 1.3 million units registered across the EU. Looking at the five big Western European markets, Germany was the only major car market to post positive results (+4.7%). The region-wide increase was largely supported by the Central European countries, where registrations went up 13.4% in July.

In Croatia, 6,205 new cars were registered in July, up 8.5% on the year.

More economy news can be found in the Business section.

ZAGREB, September 16, 2019 - In nearly one in two cities or municipalities, 248 of 555, less than 10% of the population is employed, Jutarnji List daily said in Monday's issue.

These alarming data reveal, as warned by economists, the extent to which Croatia has transformed into an economy increasingly based on renting, notably along the coast.

The most active population is in the northern counties of Varaždin, Krapina-Zagorje, Međimurje, and Koprivnica-Križevci. Of the ten cities with the highest share of those employed in the total population, five are in northern Croatia, with Varaždin and Čakovec having the highest shares, 60.9% and 60.1% respectively.

The Varaždin area and the Međimurje region are the healthiest parts of Croatia in terms of enterprise, Predrag Bejaković of the Institute of Public Finance told Jutarnji List.

Paradoxically, salaries there are among the lowest in the country, which economists say is due to the textile and footwear industries, which have strong roots in there and in which pay is traditionally low.

Although data on the active population by city or municipality are not complete as they do not encompass those employed in trades and freelancers, who account for 15% of all employed, as well as farmers, they represent a good indicator of trends on the labour market and in society, the newspaper said.

The shares refer to the total population of a city or municipality, not just the active population, reflecting the demographic disaster Croatia is going through. While the north of the country, the City of Zagreb and the tourism-oriented Istria County are doing relatively well, the rest of the country is having a hard time both demographically and economically.

Many talk about two Croatias, one focused on enterprise and one on the rent economy and employment in the public sector, Jutarnji List said.

More news about Croatian economy can be found in the Business section.

ZAGREB, September 14, 2019 - Croatian Minister of Economy, Entrepreneurship and Crafts Darko Horvat met with Russia's Minister of Agriculture Dmitry Patrushev in Dubrovnik on Friday and the Russian minister underscored that interest exists to further expand cooperation between Russian and Croatian companies and invited Horvat to attend the Agro-Industrial fair that will be held October 9 - 12 in Moscow.

The ministry said in a press release that over the past three years economic-trade cooperation between Croatia and Russia was constantly increasing, which can be seen in commodity exchange statistics as well as in the growing number of arrivals and bed nights generated by Russian tourists. An inter-government commission for economic and science-technological cooperation, which Horvat and Patrushev chair, especially contributes to bilateral relations.

"The commission isn't just a formality but an excellent opportunity to exchange experiences, clearly define the objectives and direction of bilateral cooperation, and deepen the good relations between our countries. That is why I am pleased that our meetings are held according to plans and that we are prepared to work on having our friendly and economic relations grow," Minister Horvat underscored, adding that he was particularly pleased that in the first 7 months of this year the number of Russian tourists had increased by 10% compared to the same period last year.

Patrushev confirmed that interest exists to further expand cooperation between Russian and Croatian companies. He invited Minister Horvat to attend the Agro-Industrial Fair in Moscow in October.

The more often we meet, the more cooperation between our countries gets better and more successful. It is important to talk openly about all issues that can help us in further intensifying our economic cooperation, Patrushev said.

Both sides expressed their satisfaction with a project to supply gas to the oil refinery in Bosanski Brod after the project's key partners, Croatia's Crodux and Russia's Zarubezhneft, singed binding documents in May this year regarding the project's implementation.

Cooperation continues to focus on industry, energy, tourism, agriculture, science and technology, the ministry said in the press release.

Total investments by Russia's investors in Croatia to date amount to more than 410 million euro and in the first four months of 2019 Croatia's exports to Russia increased by 21.6% on the year.

The 9th meeting of the inter-government commission will be held in Moscow before the end of this year, Minister Horvat advised.

More news about relations between Croatia and Russia can be found in the Politics section.

ZAGREB, September 12, 2019 - Croatian government budget revenues reached 65.1 billion kuna in the first half of 2019, an increase of 8.5% on the same period in 2018, while expenditures increased by 8.3% to 66.9 billion kuna, according to a report on budget execution adopted at a government session on Thursday.

The budget deficit was 1.88 billion kuna, roughly the same as last year.

Presenting the report, the State Secretary at the Ministry of Finance, Zdravko Zrinušić, said that positive economic developments had continued in the first half of the year, with real GDP increasing by 3.1% compared with the first half of 2018.

Tax revenues increased by 4.8% to 37.1 billion kuna, with VAT revenues going up by 4.7% to 23.5 billion kuna. This was mainly due to increased spending as a result of positive economic trends, Zrinušić said, recalling that additional tax reliefs had become effective at the start of the year.

Profit tax revenues reached 5.3 billion kuna, up 8.3%, and revenues from special taxes and excises rose by 2.2% to 7.3 billion kuna.

On the other hand, revenues from contributions declined by 2.2% to 11.9 billion kuna, which Zrinušić said was due to the effects of the tax reform at the start of the year, namely the abolition of contributions on employment and safety at work. The health insurance contribution was increased at the start of the year, but it does not count as a budget revenue, the report notes.

The 8.3% rise in expenditures was due to the better absorption of EU funds. Expenditures financed by EU funds reached 6.2 billion kuna, an increase of 1.8 billion kuna or 42% on the first half of 2018, the report says.

More economic news can be found in the Business section.

ZAGREB, September 9, 2019 - Economy Minister Darko Horvat has underscored that liquid funds managed by compulsory pension funds (OMF) are supposed to primarily boost Croatia's GDP growth, adding that that the government can immediately present some 30 projects for OMFs to invest in.

Horvat was addressing a business conference "Investment challenges for pension funds" organised by the Jutarnji List daily and the Alliance of Associations of Pension and Insurance Management Funds (UMFO) in Zagreb on Monday, and on that occasion, he wondered how projects should be prepared for funds to invest in them.

As an example, he mentioned the Rimac Automobili company which is "seeking 100 million euro."

"The basic question is why not provide 100 million euro to Rimac from pension funds if we know that the yield, I am certain, will be greater than depositing those funds into the banking system," Horvat wondered.

He called on pension funds for talks on cooperation, saying that the government today can present some 30 prepared investments that pension funds can choose to invest in.

Labour and Pension System Minister Josip Aladrović underlined that compulsory pension funds have more than 107 billion kuna at their disposal.

He added that OMFs have almost two million members.

In the context of an exceptionally low level of activity by members to select a compulsory pension fund, Aladrović warned of a low level of financial and pension literacy.

CEO of the Croatian Financial Service Supervisory Agency, Ante Žigman, said that currently OMFs can invest 30 billion kuna in shares, which he considers to be a huge potential.

He too commented on the example of Rimac Automobili and explained that a company has to be listed on a stock market anywhere in the world for OMFs to be able to invest in it.

Mario Staroselčić of the AZ pension fund explained that OMFs had invested more than 10 billion kuna in local companies and that the main precondition to invest in a company is that it is listed on a stock market which brings transparency and security.

More economic news can be found in the Business section.

ZAGREB, September 8, 2019 - The value of construction work in Croatia, performed by companies employing 20 workers or more, increased by 10.6% in the second quarter of 2019 compared with the same period in 2018, while at the same time the value of new orders increased by 3.7%, data from the National Bureau of Statistics (DZS) show.

The value of construction work was 6.68 billion kuna, of which 4.47 billion kuna related to work performed by own workers and 2.21 billion kuna to work carried out by subcontractors. 47.2% of the work was done on buildings and 52.8% on other structures.

The value of new orders was 5.06 billion kuna, of which 2.39 billion kuna related to buildings and 2.67 billion kuna to other structures.

In statistics, the term "other structures" includes roads, railway lines, pipelines, dams, sports grounds and the like.

More economic news can be found in the Business section.

ZAGREB, September 2, 2019 - Croatia's industrial production increased by 3 percent in July 2019 compared with the same month in 2018, returning to positive territory following a considerable decline in June, the State Bureau of Statistics (DZS) said on Monday.

According to calendar-adjusted data, industrial output in July increased by 4.8 percent from the previous month and by 3 percent from July last year.

Following a comparatively strong decline in June, of 5.6 percent, the volume of industrial production returned to positive values in July, analysts at Raiffeisenbank Austria (RBA) said in their comment on the DZS report.

Compared with July 2018, the production of intermediate goods increased the most, by 7.1 percent, followed by the production of non-durable consumer goods (+6.6 percent), energy (+3.6 percent) and durable consumer goods (+3.4 percent). The production of capital goods fell by 15.6 percent.

In the first seven months of this year, industrial production rose by 1.2 percent.

RBA analysts expect that the volume of industrial production will record a modest, yet positive growth rate in 2019.

Industrial production may be supported by solid domestic demand, but a slowdown in Croatia's main foreign trade partners and the still low competitiveness are a drag on the recovery of industry, RBA said.

More economic news can be found in the Business section.