ZAGREB, June 5, 2019 - The World Bank says in its latest report that Croatia's economy is likely to slow down in 2019 and 2020, warning that emerging economies in Europe and Central Asia are especially exposed to the risk of a slowdown of the activities in the euro area.

Croatia's economic activity is likely to grow at a rate at 2.5% in 2019 and 2020, according to the World Bank's Economic Prospects. Thus, Croatia's growth in 2019 and 2020 is expected to decelerate by 0.3 percentage points in comparison to the bank's report issued in January.

The initial prospects of a 2.6% rise in Croatia's economic activity in 2021 have also been revised down by 0.2 percentage points to 2.4%. "Growth in Europe and Central Asia is estimated to have slowed to 1.6% in 2019, a four-year low, partly reflecting a sharp weakening of activity in Turkey.

"Trade continues to weaken across the region, as goods trade volumes have slowed in parallel with sluggish activity in the Euro Area, the region's largest export destination," reads the report, headlined "Heightened Tensions, Subdued Investment".

The WB says that the region's outlook remains subject to significant downside risks. It also notes that "countries with large current account deficit, heavy reliance on capital inflows, or sizeable foreign-currency denominated debt – Belarus, Croatia, Georgia, the Kyrgyz Republic, Moldova, Tajikistan and Ukraine – could be subject to sudden shifts in investor sentiment. Increases in policy uncertainty could undermine business and investor confidence in the region."

"Policy disagreements between some Central European countries and the European Union, election outcomes, an escalation of international trade restrictions, and backpedalling on structural reforms could also unsettle business and investor confidence. A substantial increase in private-sector debt in the region also raises the possibility of significant contingent liabilities for the public sector."

The World Bank has also revised down forecasts for the global economy in 2019, by 0.3 percentage points, to 2.6%.

In 2020, the global economy is expected to grow at a rate of 2.7%, which is slightly lower than the January forecast. A 2.8% forecast for 2021 has been confirmed.

The Global Economic Prospects (GEP) is a twice-yearly World Bank Group flagship report that examines global economic trends and how they affect developing countries.

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ZAGREB, June 4, 2019 - Croatian companies in 2018 earned more than 28.3 billion kuna in net profit, which is a significant improvement compared to the year before, when they incurred a net loss of close to 3.1 billion kuna, shows a report published by the Financial Agency (FINA) on Tuesday.

A total of 131,117 Croatian enterprises that are subject to profit taxation, not including banks, insurance companies and other financial institutions, in 2018 earned revenues in the amount of 751.2 billion kuna and their expenses totalled 715.4 billion. Compared to 2017, the total revenue was 8.6% higher while expenses were 4% higher.

A profit amounting to 46.9 billion kuna in total was earned by 88,824 businesses (68%) while 42,293 businesses (32%) incurred losses in the amount of 18.7 billion kuna in total.

Compared to 2017, the profit earned by businesses rose by 15.2% while the loss dropped by 57.4%, resulting in a net profit of more than 28.2 billion kuna. In 2017, a net loss of slightly below 3.1 billion kuna was incurred.

The highest revenue in 2018 was reported by the INA oil company, in the amount of 18.4 billion kuna, and INA also reported the highest profit, of 1.3 billion kuna.

The Konzum retail chain had the highest number of employees, 9,419, a drop compared to 2017, when it employed 10,487 people.

Croatian businesses in 2018 employed 939,954 workers, which is 48,428 workers or 5.2% more than in 2017.

Most of the businesses, close to 29,000, operated in the commerce sector, and they earned the highest revenue, of 251.2 billion kuna, while businesses in the manufacturing sector employed the most workers, more than 241,000, an increase of 2.4% from 2017.

The average monthly net wage in 2018 was 5,584 kuna, 4.1% more than in 2017, when it amounted to 5,366 kuna.

Broken down by size, most businesses were micro businesses - 117,943 or 90%, followed by small businesses, 11,317 or 8.6%, medium businesses, 1,498 or 1.1%, and large businesses, 359 or 0.3%.

All groups of businesses ended the year 2018 with a profit. The net profit of micro businesses was slightly more than two billion kuna, small businesses earned 6.6 billion kuna in profit, medium businesses earned 7.8 billion, and large businesses 11.8 billion.

A total of 19,594 Croatian businesses exported their products in 2018, and foreign sales accounted for 147.2 billion kuna of total revenue, an increase in exports of 8.6% from 2017.

In the same period, 132.4 billion kuna worth of commodities was bought on foreign markets, with the trade surplus totalling 14.8 billion kuna.

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ZAGREB, May 31, 2019 - The volume of construction work in Croatia in March 2019 was 11.2% higher than in March 2018 and up by 13.7% in Q1 compared to Q1 last year, making it the best quarter since Q1 2008, data from the State Bureau of Statistics (DZS) show.

Month on month, construction output in March was down 2% compared to February.

The volume of works on buildings increased by 9.1% and by 14.4% on other structures year on year.

According to the DZS, other structures include roads, railways, pipelines, bridges, dams, sports grounds and the like.

According to DZS figures in the first three months of the year, construction activities increased by 13.7% compared to the same period last year.

Works to buildings in that period increased by 12.7% and infrastructure and public works increased by 15.2%.

The number of building permits issued in Q1 was up by 8.1% and the value of works to be conducted increased by 25.6% in that period.

The Central Finance and Contracting Agency (SAFU) informed that currently there are more than 300 construction sites around the country with almost 500 contracts valued at 23 billion kuna.

The Croatian Chamber of Commerce (HGK) commented that "growth in construction activities attract higher amounts from EU Funds. That is still being thwarted however by the lack of construction workers, HGK concluded.

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

ZAGREB, May 29, 2019 - In the first three months of this year, the Croatian economy grew 3.9% on the year, which is a record high growth since late 2007.

The national statistical office (DZS) on Wednesday released its preliminary estimate under which GDP in Q1 grew 3.9% from the same period last year, and household consumption and investments are perceived as the biggest contributors to this high rise.

Q1 2019 was the 19th consecutive quarter to see GDP grow and faster than in the previous quarter, when the economy grew 2.3% on the year.

The Q1 growth is on the back of household consumption of 4.4% on the year, as against 3.9% in the previous quarter. State consumption increased to 3.1% from 2.3% in the previous quarter.

Gross fixed capital formation jumped by 11.5% on the year, while in Q4 2018 it rose 6.1%. The export of goods and services increased 4.6% in Q1 2019 on the year, whereas imports went up 7.7%.

According to seasonally adjusted data, GDP in the first quarter of 2019 grew 1.8% from the previous quarter, while in relation to the first quarter of 2018 it grew 3.9%.

This rise is higher than the average growth in the European Union (1.5% year on year and 0.5% quarter on quarter).

Economy Minister Darko Horvat said on Wednesday, commenting on the 3.9% annual GDP growth in Q1, that Croatia's economy was on the right track and that it would be good if this rate was a stage towards the desired growth of 5%.

Responding to questions from the press, he said neither he nor the other ministers were content with a 2.5% growth. "If this number that's happening is a passing or interim phase to the 5% economic growth I desire, then we're on the right track," he said, adding that "this is slowly going towards 5%".

GDP in Q1 grew 3.9% from the same period last year, and household consumption and investments were perceived as the biggest contributors to the fastest rise since the end of 2007.

The Croatian Chamber of Commerce (HGK) said the Q1 growth was markedly higher than expected thanks to a relatively dynamic growth of commodity exports and an unexpectedly high growth of domestic demand.

Given that the European Commission's spring forecast predicts a 2.6% growth for Croatia this year, the same as in 2018, the growth reported by the national statistical office in its first forecasts for Q1 is markedly higher than expected.

More news about economic growth can be found in the Business section.

ZAGREB, May 24, 2019 - Croatian exports in 2018 totalled 107.9 billion kuna, up 3.2% on 2017, while imports totalled 176.2 billion kuna, up 7.9%, putting the trade deficit at 68.3 billion kuna, up 16%, the national statistical office said on Friday. The export-import ratio was 61.2%, whereas in 2017 it was 64%.

In 2018, the EU market accounted for nearly 69% of Croatian exports, up 9.3% on the year to 74.2 billion kuna, and for 78% of imports, which increased 7.9% to 176.2 billion kuna.

Croatia is in the top five of EU member states which generated more than three-thirds of their imports from other member states.

In 2018, Croatia's main trade partners in the EU were Germany, Italy and Slovenia. Nearly 15% of Croatian exports went to Italy, up 10% on 2017, totalling 15.8 billion kuna. Croatian imports from Germany accounted for over 15% of all imports, going up 7.2% from 2017. Trade with Slovenia accounted for almost 11% of all Croatian exports and imports in 2018. Exports went up 6.2% to 11.9 billion kuna, while imports were up 12.2% to 12.2 billion kuna.

Croatia's exchange of commodities with third countries accounted for 31% of all exports, which dropped 8%, and nearly 22% of all imports, which increased 8% in comparison with 2017.

Croatia's main trade partners outside the EU were Bosnia and Herzegovina, Serbia and China. In 2018, 9% of Croatian exports were made to BiH, down 1% on the year to 10.1 billion kuna, while imports increased 6.4% to 5.4 billion kuna.

Exports to Serbia dropped 5.5% to 4.7 billion kuna, while imports went up 3.8% to 4.3 billion kuna.

Exports to China stood at 989.4 million kuna, up 18.%, while imports were 5.9 billion kuna, up 15.1%.

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

ZAGREB, May 23, 2019 - The government on Thursday adopted a conclusion on increasing an allocation for the development of business zones, and gave its consent for the Rijeka Port Authority to borrow 108.5 million kuna to upgrade a container terminal.

The initial business zone allocation was 76 million kuna but the acceptable project proposals that were submitted total 274.6 million kuna, so the allocation was increased by 110.7 million kuna, the state secretary at the Economy Ministry, Mario Antonić.

In cooperation with the Regional Development and EU Funds Ministry, the Economy Ministry will propose finding the remaining 87.8 million kuna necessary to fund all the applications by amending the Competitiveness and Cohesion Operational Programme, he said. If the European Commission does not approve the amendment, the money will come from the Economy Ministry.

The government also adopted a draft decision on the establishment of close cooperation between the Croatian National Bank (HNB) and the European Central Bank (ECB).

Finance Minister Zdravko Marić recalled that parliament passed a law ratifying the Treaty on Stability, Coordination and Governance in the Economic and Monetary Union, which he said was the first legal prerequisite for Croatia's integration with the euro area.

Marić said the draft decision authorised him and the HNB governor to sign a request for the establishment of close cooperation between the HNB and the ECB, adding that it was one of the steps in the introduction of the euro.

More news about doing business in Croatia can be found in the Business section.

ZAGREB, May 21, 2019 - Foreign-owned private companies are the most desirable employers in Croatia, a survey conducted by the MojPosao job search website shows.

The survey, carried out in 2018 and 2019 on a sample of nearly 20,000 people, revealed that 32 percent of respondents wanted to work in a foreign-owned private company, 19 percent would prefer working in a Croatian institution and 16 percent in a foreign institution, while 14 percent would opt for a state-owned company.

Broken down by gender, 35 percent of men and 31 percent of women would like to work in a foreign-owned private company, 15 percent of men and 20 percent of women would prefer working in a Croatian institution and 14 percent of men and 17 percent of women in a foreign institution, 19 percent of men and 15 percent of women would opt for a Croatian-owned private company, and 14 percent of women and 14 percent of women would choose a state-owned company.

Broken down by age, 33 percent of respondents aged under 32, 35 percent of those aged 33-43 and 28 percent of people aged above 44 would like to work in a foreign-owned private company.

More than other age groups, respondents aged above 44 would prefer working in domestic and foreign-owned companies and state-owned companies, while younger respondents would opt for Croatian-owned private companies (18 percent of respondents aged below 33, 15 percent of those aged 33-43, and 13 percent of those aged above 44).

The survey also revealed that 48 percent of those interviewed often think about changing their employer, 34 percent do so sometimes, while 18 percent never think about changing their employer. People above 44 think the most about changing their employer (48 percent).

Most of the respondents (38 percent) said they are not prepared to move to another country for work, while 62 percent are inclined to consider moving. Men (71 percent) are more inclined to moving to another country than women (58 percent).

Younger people are more inclined to move to another country, as indicated by 65 percent of respondents aged under 32, 58 percent of those aged 33-43 and 60 percent of those aged above 44.

Of those willing to relocate, most of them would go to Germany (23 percent), Austria (16 percent), Switzerland (11 percent) and the United Kingdom (10 percent).

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

ZAGREB, May 15 (Hina) - Consumer prices in April 2019 were 0.7% higher than in the same month of 2018 and 0.6% higher than in the previous month, the national statistical office (DZS) said on Wednesday. This is a slower monthly and annual inflation rate considering that in March consumer prices grew by one percent from February, with the annual inflation rate in March being 0.9%.

DZS figures show that prices of alcohol and tobacco saw the highest annual increase, of 4.8%, followed by prices of housing, water, electricity, gas and other fuels, which went up by 3.9%.

Prices of transport grew by an average 2.8% from April last year. Prices of restaurant and hotel services rose by 3.2%, and prices of recreation and culture went up 1.1%.

Prices of food and non-alcoholic beverages, which have the largest portion in the structure of consumer prices, of 27.8%, dropped by 1.7%. Prices of fruit dropped the most on the year, by 16.3%, followed by prices of meat, which fell by 3.1%.

Earlier this year the VAT rate for a number of food products was lowered from 25% to 13%.

Prices of clothing and footwear dropped as well, by 3%, while prices of healthcare services and communications declined by 1.3% and 0.4% respectively.

Month-on-month, consumer prices grew for the third consecutive month, going up in April by 0.6% from March.

Analysts at Raiffeisenbank Austria said that the statistics indicated that future inflation trends would be determined by energy and food prices, with energy prices depending on trends on world commodity markets.

"Inflation will remain moderate this year again and we expect an average annual inflation rate of around 1% in 2019," the analysts said.

More news about inflation in Croatia can be found in the Business section.

ZAGREB, May 14, 2019 - The Culmena company in Zagreb on Tuesday unveiled the "100 Smart Factories" project aimed at helping companies align with the requirements of Industry 4.0.

The project is designed for small, medium and large manufacturing companies and uses the innovative Culis method in helping the industrial and services sectors to quickly undergo digital transformation, said Professor Nedeljko Štefanić of the Zagreb Faculty of Mechanical Engineering and Naval Architecture.

Culis was developed over five years based on Štefanić's experience as a member of the European Commission's task force for digitising the industrial, agricultural and healthcare sectors, and on the practical application of the best concepts such as lean manufacturing, green manufacturing and Industry 4.0.

Štefanić said that this method puts people at the centre as the greatest assets of every company because they create and improve processes. He said that the Culis method would help companies innovate their products and make them digital within a very short period of time.

He said that the method was not limited only to manufacturing companies but had also proved very successful in the public sector. He said that the method could ensure between 15 and 50 percent higher growth, adding that initial results were visible already after the first six months.

Mario Antonić, state secretary at the Ministry of Economy, said that innovation and research were an integral part of Industry 4.0, and that Croatia needed to be more competitive and productive if it were to catch up with more developed countries.

He announced that two documents would be presented soon - a programme for a digital economy and a programme for the development of artificial intelligence in Croatia.

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

ZAGREB, May 8, 2019 - Prime Minister Andrej Plenković on Tuesday commented on the European Commission's Spring Economic Forecast released in Brussels earlier in the day and strongly defended his government's pension reform.

The European Commission revised down its growth forecast for the Croatian economy for this year from 2.7% to 2.6%, underscoring that GDP will have finally surpassed the pre-crisis level this year. The Commission predicts that economic growth will continue to slow down to 2.5% in 2020.

"I haven't seen the document but I have heard that it is in line with our estimates and the estimates of other financial institutions. I want to underline that our growth is healthy, it is not based on borrowing and is happening as we witness a decline in public debt and two consecutive budget surpluses," he said.

He said that the Croatian public considered this normal, which was not the case. "The last time we had this was in 1998 when we introduced VAT... In the past two and a half years and three rounds of tax reform we have reduced the tax burden on businesses and citizens by 6.5 billion kuna, we have eliminated administrative obstacles in the amount of two billion kuna, so we are facilitating business while achieving a surplus and paying the previous governments' guarantees for the shipbuilding industry," said the prime minister.

He underscored that Croatia had to implement structural reforms such as the pension system reform. The pension reform has three goals – making pensions higher, making them the same for people who work the same number of years and have the same job, and making the system sustainable, Plenković said.

He stressed that raising the retirement age to 67 was not "Minister Marko Pavić or Andrej Plenković's invention but one by the SDP government."

"We have to see if we want changes for the better. Everyone calls for reforms, yet when a reform is launched that is in the interest of current and future pensions, there is a campaign to undermine it."

"That's okay, but then we have to ask ourselves what we want. I'm open to discussion, this reform was worked on with a lot of understanding about what we can do as a state," Plenković said, adding that there was a lot of populism in discussions about the reform, which he attributed to the ongoing campaign for EU elections.

He added that the pension reform had helped the country overcome excessive macroeconomic imbalances and improve its credit rating.

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