September the 4th, 2021 - The coronavirus pandemic hit the Croatian economy, which relies very heavily on tourism, like a tonne of bricks. While things have been far from easy over the last eighteen or so months, the OVI Index (Online Vacancy Index) provides strong hope for Croatian economic revival.

As Poslovni Dnevnik/Marija Crnjak writes, demand for labour in the Republic of Croatia exceeded the levels of 2020 and 2019 according to the OVI index, which, for the month of August 2021, shows that the demand for labour in the country is 60 percent higher than it was back in August 2020, and about 20 percent higher than in pre-pandemic August 2019.

The Institute of Economics announced the above, noting that the latest values ​​of the OVI Index are in line with other positive economic indicators that have come to the attention of the general public over recent weeks. Croatian economic revival has undoubtedly been helped enormously by a remarkably good summer tourist season, which just keeps on going.

The Online Vacancy Index (OVI) is a monthly index of online job vacancies developed at the Institute of Economics in cooperation with the popular Croatian MojPosao (MyJob) portal, and is created by simply counting the number of unique new ads whose application deadlines end within the month for which the index is calculated.

"When comparing the level of demand for labour this year and that of 2019, this is the fourth consecutive month in which the demand for labour has exceeded the pre-pandemic months, which is a strong signal of Croatian economic revival and the recovery of the labour market. Demand for work in the three traditionally most sought-after occupations - salesman, waiter and chef - is also growing compared to August 2019 and 2020, and driver and construction workers stand out from the more sought-after occupations.

It is also interesting to note that since the beginning of the coronavirus pandemic, the share of job advertisements that mention work from home ranges to approximately 1.5 to 2 percent of all advertisements, which is an increase when compared to the period before the pandemic when work from home was mentioned in less than 0.25 percent of job advertisements,'' stated EIZ analysts.

For more, make sure to check out our dedicated business section.

September the 1st, 2021 - The excellent tourist season which appears to just keep on going has pushed the Croatian retail sector out of the slump the global coronavirus pandemic had forced it into. Analysts are, unsurprisingly, very optimistic as a result.

As Poslovni Dnevnik/Ana Blaskovic writes, after a record jump in GDP in the second quarter of 2021, the indicators for the beginning of the third quarter, the most generous part of the year for the economy, also look fairly positive. In July, retail spending rose 12.8 percent for the sixth month in a row, reflecting a good tourist season and good economic recovery.

Turnover in the Croatian retail sector (referring to trade, and calendar adjusted) during the month of July increased by 2.2 percent in real terms compared to the previous month. Half a year of consumption growth comes after the previous 11 months of decline, or 5.8 percent of the deficit in 2020.

Retail trade in food, beverages and tobacco products rose 12.8 percent in July, and the non-food segment (excluding fuels and lubricants) 9.1 percent year-on-year, the Central Bureau of Statistics (CBS) calculated.

Raiffeisen Bank analysts point to the fact that last year, with which the trends are being compared and measured, the decline was large.

"Apart from the effect of the base period, the continuation of favourable trends is also the result of the good trends in tourism, moderately positive trends on the labour market, as indicated by data on consumer optimism, which, despite a slight deterioration when compared to June, continued to grow annually," they said.

The passage of time certainly provides for a decent dose of optimism for the performance of the economy in 2021 as Croatian GDP rose 16.1 percent in the second quarter, and perhaps more importantly, it was the first jump after four quarters of worrisome decline.

The Tax Administration's data on fiscalised receipts issued from the Croatian retail sector also show continued double-digit annual growth rates exceeding pre-covid levels, the RBA said, underscoring the good labour market situation and strong spending in tourism.

This continued growth, however, will depend on the development of the ongoing epidemiological situation, which is unfortunately deteriorating with warnings from the profession that we are entering the fourth wave with only 39.4 percent of the Croatian population having been fully vaccinated.

For more, follow our business section.

August the 29th, 2021 - Labour Minister Josip Aladrovic has revealed who the Croatian economic support created by the government as a result of the pandemic will continue to go to, and who it no longer will. Minister Aladrovic also announced a rise in both wages and pensions.

As Poslovni Dnevnik writes, economic aid for Croatian companies will remain in place only for those who continue to be the most vulnerable to the pandemic and to any introduced anti-epidemic measures, announced Minister Aladrovic. He stated that because of the easing of the country's epidemiological measures, he sees no reason to continue to stimulate individual employers.

Minister Aladrovic also stated that aid will continue to be paid out to the organisers of sport and cultural events, the event industry, and perhaps the hardest hit of all - travel agencies.

"So, this will keep being paid out to a relatively small segment of our society, but to those who are most exposed," said Minister Aladrovic as a guest on Dnevnik Nova TV, adding:

"If there are economic disruptions again, which we hope won't occur, we're still ready to help those to whom the disruption occurs," he said, calling once again for people to get vaccinated as the best way to preserve both public health and the domestic economy.

As for the much talked about reforms, Minister Aladrovic said that they have been implemented and that he will continue to implement them, but he didn't give a concrete answer as to when concrete reforms in the healthcare system, public administration, or the judiciary will start. He pointed out that the coronavirus pandemic has slowed down certain reforms, but he remains confident that the Government will implement them by the end of its term.

He added that it is difficult to assess whether rising prices will push certain vulnerable individuals even further into poverty.

"What is good, is that salaries are rising," said Minister Aladrovic, adding that pensions are also rising. The average pensioner will receive about 60 kuna more per month, and Aladrovic says that it is equal to almost a billion kuna annually for the state budget.

He didn't bother to properly answer the question as to whether or not it is fair for the average pension to increase by around 60 kuna, and for members of parliament to have theirs increased by as much as 230 kuna. Aladrovic briefly stated that "harmonisation takes place in accordance with the legislative framework".

''Aware of the inadequacy of certain types of pensions, we've decided on a new way of calculating family pensions that are the least adequate and we'll do all that in the next step. The lowest pensions have been increased by more than 20 percent. I'm sure that movements within the pension system will also prevent any increase in poverty,'' said Minister Aladrovic.

Speaking about the Labour Law, Minister Aladrovic said that two things are changing, the relationship between fixed-term contracts and indefinite contracts.

''We want to reduce the number of fixed-term contracts and allow those who want to work more to be able to do that,'' he said.

For more, follow our politics section.

August the 29th, 2021 - There has been a record and entirely unexpected (when looking at previous predictions from various sources) Croatian GDP jump in the second quarter of 2021, some are even daring to say that the Republic of Croatia is ''out of the recession'' the global coronavirus pandemic forced it into.

As Poslovni Dnevnik/Ana Blaskovic writes, the Croatian economy grew 16.1 percent year-on-year in the second quarter of 2021, the Central Bureau of Statistics (CBS) said.

Although the CBS points out that this is the first growth after four quarters of decline, it is also the largest since 2016, and it should be taken into account that the performance of the economy is compared with the same period last year during which the spring ''lockdown'' continued for some time. It's also worth noting that the fall in Croatian GDP reached a record 14.4 percent, which illustrates the scale of the low base effect.

While according to seasonally adjusted data, the Croatian economy recorded annual growth in the second quarter, the quarterly Croatian GDP was down by 0.2 percent.

Croatian GDP growth in the second quarter of 2021 is the first after four quarters of continuous decline due to the global coronavirus pandemic and its aftermath. At the level of the whole of 2020, the economy fell by 8 percent, which is one of the biggest minuses in the entire European Union (EU).

The growth of the economy in the period from April to the end of June is a consequence of the increases across all components of Croatian GDP, with personal consumption/spending expected to be the highest.

Household consumption grew 14 percent when compared to a 0.3 percent minus in the previous quarter. Exports of goods and services jumped 40.9 percent year-on-year; with exports of goods up by 35.2 percent and services up by 56.3 percent on the wings of a good preseason.

The imports of goods and services also jumped by 30.3 percent. The imports of goods rose 30.5 percent and services rose by 28.9 percent. Of the other components that make up the Croatian GDP, gross fixed capital formation rose 18.3 percent year-on-year and government spending rose by 4 percent.

For more, follow our business section.

August the 11th, 2021 - An increasing number of Italy-headquartered companies want to start moving the production part of their business to the Republic of Croatia. Could this bring even closer economic ties between Italian companies and those from here in Croatia? It's likely.

As Poslovni Dnevnik/Marija Brnic writes, for the third month in a row now, Italy has been very firmly in the position of the leading Croatian export market. Last year, during the country's lockdown in the face of the global coronavirus pandemic which was declared by Italy significantly earlier than other European countries, exports to that country dropped drastically, and the traditional status of the main destination for Croatian products was taken over by Germany.

In the first five months of 2021, Croatian exports have been growing well on both markets, but they're still stronger in Italy, and, as data from the Central Bureau of Statistics shows, the recovery so far brings with it a far better export result than back during the same period in 2019.

In the first five months of this year, a total of 899 million euros worth of goods were placed in neighbouring Italy, which is seven million euros more than in pre-pandemic 2019, and compared to the first five months of 2020, it is a jump of as much as 235 million euros.

In addition to exports, imports from Italy are also growing significantly, although they're still behind the values ​​achieved in the first five months of 2019. It amounts to 1.32 billion euros and is lower by about 300 million euros.

"Our predictions were that we'd have the beginning of a recovery in bilateral relations, but the figures recorded and the dynamics in the first part of the year exceeded all of our expectations," said Andrea Perkov, Secretary General of the Italian-Croatian Chamber of Commerce. The real expansion in the already close economic relations of these two neighbouring countries, she claims, is very much expected.

"Last year's crisis gave rise to a change in business orientation among Italian companies, which has been present for a long time to some degree or another, and that is the transfer of business and production to other markets, even distant ones. With the coronavirus pandemic taking precedent, this tendency was interrupted, and in the first part of the year we recorded a huge increase in interest from Italian companies in relocating their production and expanding their business right here in Croatia,'' said Perkov.

Those more distant destinations in which Italian companies operated were mainly China and North African countries, when it comes to countries outside the EU, Serbia, and within the EU, Bulgaria and Romania were in the lead. Now, between 60 and 70 Italian companies have already expressed interest in investing in Croatia, with most inquiries coming for infrastructure and food production.

The locations that are being looked into are mostly in Istria, which doesn't come as a surprise as many prefer bilingualism as well as good infrastructure and traffic connections, but Perkov points out that he is also interested in the Split-Dalmatia and Medjimurje counties.

With the representatives of Italian companies at the level of the Italian system that connects the chambers, (the Italian Trade Institute and the Embassy in Croatia), numerous meetings and communication about possible investments have been being organised, and Perkov sees special merit in establishing stronger bilateral relations in the commitment of Italian Ambassador to Croatia Pierfrancesco Sacco who took office last year.

The Croatian NPOO, the text of which has already been translated into Italian, is expected to give additional impetus to a stronger connection between Italian companies and Croatia. As far as investment is concerned, the cost is not a problem for Italian companies, but, according to the Italian-Croatian Chamber of Commerce, concerns about Croatia's infamous slow administration and legal uncertainty prevail.

As the pandemic-induced shock has "reset" everything on a global scale, Italians are now much more inclined to do business in their closer neighbourhood, with one sector recording intensive cooperation and networking, as well as mutual investment. IT, a blossoming sector in Croatia, will dictate more or less the entire pace.

As far as exports are concerned, it isn't yet possible to determine from official statistics whether any of the products particularly bounced off the market during the first part of this year and pushed the overall result, but in recent years the structure of Croatian exports has been dominated by wood, metal and textile and the food industry.

With the implementation of the projects currently being prepared, Andrea Perkov is convinced that further strong growth in exports and total trade between Croatia and Italy can be expected with a decent dose of healthy optimism.

In addition to Italy and Italian companies, an increase in exports is being steadily recorded in most major markets, and the only significant drop in statistics is shown in relations with Luxembourg, where last year, the value of exports exceeded 122 million euros in five months, and this year it stands at a mere 5 million euros.

That being said, exports to Luxembourg tend to fluctuate strongly and vary due to dependence on shipbuilding exports anyway, which are lacking this year.

It can also be said that the case of Italy reflects the overall result of Croatian exports, which achieved a record result of a total of 7.11 billion euros on a five-month level, which greatly exceeds the previous highest level from pre-crisis 2019, by as much as 895 million euros in total.

The result will be even higher at the level of six months, as preliminary CBS data shows that exports in the first half reached 8.72 billion euros, which is almost 1.34 billion euros more than in the first half of the record, pre-pandemic 2019.

For more, follow our business section.

August the 9th, 2021 - Croatian spending increases signal the long awaited recovery process for the domestic economy, with as much as 113 billion kuna more spent so far in 2021 than back during pre-pandemic, record 2019!

As Morski writes, the Croatian spending increase is seeing much more spent than was spent back in 2019, with consumption records being set. For the first time, Croats spent the most in July, and not during August as was typically the case before. As of today, Croats have spent 113 billion kuna more than they did back in 2019.

The fact that the sale of luxury cars is progressing like never before speaks for itself and it's almost as if there had never been an unprecedented global public health crisis. That isn't all, brand new apartments are being reserved and snapped up before the builders even arrive at the construction sites.

It didn’t take long for Croats to forget about the pandemic-induced economic crisis that rocked the world last year and current Croatian spending habits are well and truly reflecting that stance.

On July the 30th, 2021, the Croatian spending/consumption record was broken. Receipts and bills worth a massive 926 million kuna in total were issued, which is the highest in terms of Croatian spending in one day since the introduction of fiscalisation in the country.

During the pandemic which dominated 2020, Croatian residents sat at home and saved more than 15 billion kuna, which they're now out spending, economists point out.

''In a way, they were waiting for the uncertainty surrounding the public health crisis to pass so that they could start spending their cash. The recovery of consumption and its significant growth has a positive effect on the situation in the state budget, given the VAT revenues, which are its most important item,'' explained economist Iva Tomic.

In the first half of this year, almost 6,000 more cars were purchased than at the same time last year, and the most luxurious ones are doing especially well - for example, twice as many Porsches were sold.

Apartments were also sought, and a brand new residential complex will be built on the site of some dilapidated barracks in the very centre of Zagreb. Although the construction has not even started, the apartments are already being purchased, despite the high price of up to 4,000 euros per square metre. It has been said that this real case of consumer fever after a pandemic-dominated year hasn't come as much of a surprise to psychologists.

For more, follow our lifestyle section.

August the 4th, 2021 - The ongoing coronavirus pandemic has threatened jobs like never before, with countries which rely very heavily on tourism suffering unimaginable uncertainty. Croatia is one of them. Things are slowly recovering however, and the Zagreb County employment rate has risen.

Economic issues in Croatia weren't ''born'' when the pandemic struck the globe, but they were certainly made exponentially worse with intermittent lockdowns and issues with transport, travel and tourism. While the Zagreb County employment rate perhaps isn't the one you'd expect to see much growth in comparison to the coast, things are looking up.

As Poslovni Dnevnik writes, with the highest total revenue of 6.1 billion kuna in 2020 and the largest number of employees - 2,377, Lidl Hrvatska (Croatia) from Velika Gorica neat the City of Zagreb maintained its dominant role among leading companies based in Zagreb County.

The largest exporter was the company Hospira Zagreb from Prigorje Brdovecki (809.5 million kuna), according to Fina, which, for the pandemic-dominated year of 2020, shows a good picture of Zagreb County's economy in which 9258 enterprises had their headquarters last year. With its 63,044 employees, there is a 3.3 percent increase in Zagreb County employment levels.

The average monthly net salary for Zagreb County employees amounted to 6,144 kuna, which is 2.7 percent higher than it was back in 2019 and 2.9 percent higher than the average for that category at the Croatian level.

According to the processed AFS for 2020, companies operating in this continental Croatian county achieved 56.9 billion kuna of total revenues (0.1 percent more than back in 2019).

Compared to other counties, Zagreb County is highly ranked according to a number of indicators: it is in fifth place according to the number of companies headquartered there, third according to the number of employees, second according to total revenues and realised net profit, and number one according to the indicator of labour productivity measured by net profit and the number of employees, making it the country's best in that regard at the moment.

For more, follow our lifestyle section.

July the 29th, 2021 - The Croatian National Bank (CNB/HNB) has warned of potential issues that the domestic economy might yet face despite the currently favourable Croatian economic outlook.

As Poslovni Dnevnik writes, due to the possibility of a new wave of the coronavirus pandemic and potential lockdowns, there is room for the further growth of property prices above their real value with the risk of a sudden and sharp decline, as well as the growth of bad loans after the abolition of measures and grants. These are just a couple of potential issues which could arise and directly threaten Croatia's still fragile recovery and growth throughout the rest of 2021.

The current Croatian economic outlook is good, and that growth is expected to be between 5 and 7 percent, as most analysts see it, while the most optimistic of all is the CNB itself, which in its baseline scenario expects as much as 6.8 percent of GDP growth this year. Personal consumption, investment, as well as exports are growing, and a massive stimulus from the National Recovery and Resilience Plan is expected.

Of course, all of this mostly depends on the summer season for which tourism workers are now trying to make last for as long as possible and bring at least 70 percent of revenue from pre-pandemic 2019. The success of the 2021 tourist season depends mostly on the (non)materialisation of this first risk, reports Novi list.

CNB Governor Boris Vujcic recently explained that the aforementioned growth is higher than 6 percent (6.8 percent) of the CNB's basic scenario: this is what the CNB expects as the most probable course of events, and it implies that the worst of the crisis is behind us, but dangers remain.

In short, the national bank doesn't expect that the aforementioned risks will materialise, however, there is a danger which remains and the central bank is aware of it. Therefore, if there was a significant deterioration of the epidemiological situation and the fourth wave did arrive, Vujcic said that the Croatian economy would survive another lockdown, but growth, he said, would be slower due to the situation in the most affected sectors.

There are also sectors that work independently and aren't really influenced by the pandemic, and they would still pull in some growth in such a dire scenario. The CNB has now, in a new issue of its publication Macroprudential Diagnostics, enumerated these potential triggers for the creation of a risk and analysed them in detail.

“The great uncertainty and unpredictability of the course of the pandemic poses risks in the coming period, despite the growing proportion of the population being vaccinated. The possibility of a new wave after the summer months is an important risk to take into consideration for the continued recovery of Croatian economic activity.

The possible worsening of the epidemiological situation and the strengthening of epidemiological measures, including localised measures, would adversely affect the speed of recovery and the Croatian economic outlook, as well as the sustainability of public finances,'' the CNB said.

Delaying Croatian economic recovery and premature withdrawal of measures introduced during the pandemic could lead to a deterioration in the debt service capacity of part of the private sector, especially those in which debt levels are high and support measures contribute significantly to maintaining relatively stable incomes. Total exposure to systemic risks during the second quarter of 2021 remain high, according to the CNB.

Further progress in terms of the vaccination of the population, together with the mitigation and eventual abolition of epidemiological measures, should support the continuation of the economic recovery during 2021 and secure a decent Croatian economic outlook going forward.

For more, follow our lifestyle section.

July the 22nd, 2021 - Five Croatian company owners are seeking not only answers but compensation for their extreme losses incurred owing to lockdowns and limitations from the Croatian Civil Protection Directorate.

As Novac/Gordana Grgas writes, five Croatian company owners are refusing to let this issue drop as their very existence was threatened during the pandemic. As such, they have filed a lawsuit against the state seeking compensation for what they claim are discriminatory decisions by the Civil Protection Directorate and inadequate economic measures introduced by the government, funded and logistically supported by the Voice of Entrepreneurs Association (UGP).

The amount they're asking for in court hasn't yet been publicly stated, and they say that it was calculated in relation to the turnover and profit that each of the companies had back during pre-pandemic 2019. The Croatian companies in question are "Djurina hiza" from Varazdin, Caffe & Wine Bar from Rijeka, the travel agencies "Svi koncerti/All concerts" from Varazdin, "Locuples" from the vicinity of Split and the Shark Attack trade from Primosten.

The first step in the lawsuit against the state for damages is a request from the Croatian company owners to attempt to come to a peaceful solution, which was sent to the Zagreb County State's Attorney's Office, it was said yesterday at a press conference organised by the UGP. As explained by the Matic and partners law firm who decided to take these cases, this means that within the legal deadline of three months "the state has a good chance to find modalities and an adequate solution." In other words, they believe that lawsuits shouldn't be filed with the competent courts if the state decides to settle in another manner.

Although the Constitutional Court has so far confirmed in its opinions that the measures adopted due to the pandemic were in accordance with the Constitution, lawyer Mato Matic believes that the Civil Protection Directorate directly violated the constitutional rights of Croatian company owners and states that there are serious violations of three articles of the Constitution (49, 50 and 54).

''Who exactly are those behind the Civil Protection Directorate? On what basis did they make thirteen decisions? On the basis of nothing,'' stated Matic, explaining that the state should have announced the introduction of a state of emergency so that the aforementioned group could make decisions, and noted that President Zoran Milanovic once spoke about it. Thus, Matic believes, there was no legal basis for these decisions to have been made, and no research has ever been conducted to suggest otherwise.

What the aforementioned law firm considers to be important is that judgments have been passed in several EU countries in support of such arguments, stating that the Spanish Constitutional Court declared the spring 2020 lockdown illegal, and the Belgian courts in Brussels declared the ban on the work of caterers and those in the hospitality industry to be illegal. They also cite the decision of the General Court of the European Union, which, as they say, interprets that everything that is prohibited or restricted for Croatian company owners by the decisions of the Government and the Civil Protection Directorate should be compensated in some way.

Hrvoje Bujas, the president of UGP, says that the lawsuits of the group's members are far from a bluff and says that the "gentlemen in the government" should take them very seriously. He emphasises that these are companies that were doing very well until the outbreak of the pandemic, and "became ruins" through absolutely no fault of their own.

For more, follow our dedicated business section.

July the 17th, 2021 - Foreign analysts appear to be much more optimistic when looking at the Croatian economic picture and subsequent economic recovery. 

As Poslovni Dnevnik/Jadranka Dozan writes, it isn't that there is absolutely no explanation for the prevailing impression of the suppression of optimism among the Croatian public, but there have been some shifts.

When it comes to Croatian economic picture and the prospects, and despite the still present uncertainties about the pandemic, news that already looks like a wave optimism has appeared. The last in the series, from the Northern European powerhouse Great Britain, made the Croatian tourism sector especially happy.

Croatia will no longer be on the UK's amber list, but instead it will find itself on the green list. This significantly facilitates the return of British tourists after holidaying here, which is positive for the tourist season. However, recently the Croatian coast changed its colour from green to orange on the "Covid map" of the ECDC. It's therefore a mixed bag.

At the session of the two Councils on Wednesday, the Croatian National Bank issued a revision of the projection of real Croatian GDP growth in 2021. Compared to the original projected 5.9 percent growth, as part of the regular semi-annual review, it raised its growth projection for this year to 6.8 percent.

Although the European Commission in its summer forecasts a week ago improved the expectations of the growth rate (i) of the Croatian economy for 2021, in relation to the CNB's forecasts, the Commission now seems even conservative. The EC has raised its forecasts for this year from 5 to 5.4 percent.

Admittedly, this is primarily a correction that (as is the case with the CNB) largely reflects the assessment that the part of the recovery of the Croatian economic picture that was expected to materialise next year will actually move to 2021. As such, the EC now predicts a rate of 5.9 percent for next year instead of the recent forecast of 6 percent real growth.

Last week's summer forecasts from the Commission coincided with another positively intoned occasion when looking at the Croatian economic picture. EC President Ursula von der Leyen visited Zagreb and gave a positive assessment of the National Recovery and Resilience Plan, a document that forms the basis for European funding of projects worth billions of euros in the coming years.

However, in addition to the aforementioned wave of optimism, more forecasts of a number of international analytical and investment houses that don't have as much media visibility are also important.

For example, analysts at Moody’s Analytics recently updated their forecasts and are now counting on as much as 10.2 percent of GDP growth for Croatia. The Oxford Economics forecast is just under 9.9 percent.

Compared to most Croatian forecasters and institutions, the current forecasts of Croatian GDP growth are significantly higher according to Citigroup or Fitch Ratings, which see it at +8.5 percent this year. The same goes for the Dutch ING with their current forecast of eight percent, and Capital Economics with the expectation of 7.5 percent growth for the Croatian economy this year.

Coronavirus-related risks remain

Whether Croatian economists see better and more deeply, or they naturally shift their focus to economic weaknesses and risks, remains to be seen. In any case, all forecasts for the Croatian economic picture today are accompanied by reservations or remarks related to the risks of a possible unfavourable development of the epidemiological situation. For economies that, like Croatia, are strongly dependent on tourism or services that strongly imply social contacts, this is a much more sensitive variable.

In any case, in the Government, ie the Ministry of Finance, are officially sticking to the growth projections from a few months ago, and they stand at 5.2 percent.

For more, follow our lifestyle section.