April 7, 2023 - The World Bank raised its estimate of growth of the Croatian economy this year to 1.3 percent and forecasts that inflation in Croatia will slow down to an average of 7.2 percent in 2023. The World Bank has thus corrected to a higher estimate of the growth of the Croatian economy for this year, considering that at the beginning of 2023, it forecasted that the Croatian GDP would grow by 0.8 percent.

"Economic activity in Central Asia and Europe, including in Croatia, will probably remain at a modest level in 2023 due to the consequences of the Russian invasion of Ukraine, persistently high inflation, and increasingly strict financing conditions," the World Bank pointed out in a report on the economic news in the Europe and Central Asia region, published on Thursday, as reported by Index.

According to the report, in the period after 2023, the growth of the Croatian economy will start on the path of a gradual recovery in parallel with the reduction of uncertainty, assuming the normalization of prices on the energy market, the removal of the remaining supply bottlenecks and the improvement of the external environment.

As a result, the World Bank expects economic growth in the period 2024-2025 to strengthen and reach an average of 2.9 percent, which will have a positive impact on labor market trends, along with employment growth, and a drop in the unemployment rate below 6.5 percent by 2025.

After the inflation rate in Croatia reached a peak of 13.5 percent last November, the World Bank estimates that it will fall to an average of 7.2 percent in 2023.

Growth in the region is 1.4 percent, but the prospects are still highly uncertain

In the report on current economic affairs in Europe and Central Asia, the World Bank expects regional growth to reach 1.4 percent in 2023, significantly better than the previously expected 0.1 percent.

"The positive, albeit deeply subdued, economic activity this year reflects a milder decline in the Russian and improving prospects for the Ukrainian economy. During 2024 and 2025, regional growth will increase by an average of 2.7 percent, thanks to the easing of inflation, the recovery of domestic demand, and the improvement of the external environment ", are the expectations of the World Bank.

However, they noted that the prospects for the region are still highly uncertain, so growth in 2023 may be weaker, which may be affected by an additional escalation of the war in Ukraine, further increase in food and energy prices, acceleration of the growth of interest rates in the world or the region, and there are potential adverse effects of current events in the banking systems of some developed economies.

The Bank estimates that the Ukrainian economy will grow by 0.5 percent this year, after last year's sharp decline of 29.2 percent due to Russian aggression against the country.

"Although Ukraine paid a huge economic toll due to the invasion, the reopening of Ukrainian ports on the Black Sea and the continuation of grain trade, as well as substantial donor support, are helping to strengthen economic activity in the current year," the World Bank wrote.

Their latest estimate is that reconstruction and recovery costs in Ukraine have risen to $411 billion, more than double the scope of Ukraine's pre-war economy in 2021.

In 2022 we saw the highest level of inflation among all regions of the developing world

The World Bank reminded that due to the sudden increase in consumer prices, primarily food, and energy, the average annual inflation rate in emerging and developing economies in Europe and Central Asia jumped to as much as 15.9 percent at the end of 2022, reaching the highest level in more than 20 years, but also the highest level among all regions of the developing world.

The World Bank's Chief Economist for Europe and Central Asia, Ivailo Izvorski, warned that the high inflation rate affects the poorest segments of the population much harder than the richest.

"To better protect vulnerable groups and stimulate economic growth, public policies should consider the differences in the impact of inflation on different income classes and resort to more accurate indicators to determine the real cost of high prices for the poorest," Izvorski believes.

The World Bank reminded that the governments of countries throughout the region responded to the cost of living crisis by introducing social assistance and subsidies, but with the assessment that the burden of the cost of living crisis was not evenly distributed.

"Public policies that do not consider the different rates of inflation faced by individual households are likely to result in inadequate support for vulnerable groups and may ultimately prove ineffective and less effective. Moving away from the Consumer Price Index (CPI) is therefore recommended as the established measure of inflation to more accurately determine the real living costs of the poorest citizens. This is of crucial importance for designing better policies to stimulate growth and alleviate poverty," according to the World Bank.

They also referred to Croatia, writing that the increase in inflation reduced the purchasing power of households, especially when it comes to the poorest fifth of the population. "Croatian government partially prevented the more severe consequences of the global spike in energy and food prices by bringing several aid packages during 2022 and early 2023. These packages include price limits for electricity, gas, and certain food products and targeted financial compensation for the most vulnerable segments of society," the Bank reminded.

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ZAGREB, 6 July 2022 - Visiting Croatia on July 4-5, Gallina A. Vincelette, World Bank Regional Director for the European Union, held high-level meetings with key stakeholders to discuss the country's development priorities, the World Bank's support, latest macro-fiscal developments, and evolving global challenges.

Vincelette, who was accompanied by Jehan Arulpragasam, World Bank Country Manager for Croatia, and members of his team, met with Deputy Prime Minister and Minister of Finance, Zdravko Marić, Minister of Labor, Pension System, Family and Social Policy, Marin Piletić, Minister of Justice and Public Administration, Ivan Malenica, and key representatives from the Ministry of Economy and Sustainable Development, the World Bank said in a statement.

"The Government of the Republic of Croatia must be commended for its economic and fiscal performance in managing the recent challenging global developments. The authorities are also continuing to deepen integration with the EU by fulfilling all economic criteria for joining the euro area in January 2023," said Vincelette, expressing satisfaction with the government's progress in implementing the agenda outlined in its National Recovery and Resilience Plan.

"Effective implementation of reforms would enable Croatia to create better foundations for long-term growth and lead to a more resilient, greener, and inclusive society. The World Bank is committed to continuing to support Croatia in achieving these goals."

During her visit, Vincelette also participated in the opening of the new Land Registry Office of the Zagreb Municipal Civil Court, financed by the Integrated Land Administration System Implementation Project, which is supported by the World Bank. The renovation was part of a program of support provided for the modernisation of the Croatian land administration and management system, with the aim of improving its efficiency, transparency and cost effectiveness.

"The most visible result of our joint work has been the enhancement of land registry services. Croatian citizens now benefit from reduced time for processing land transactions, and can conduct numerous services online. Fifty five percent of requests for land services are currently made online. The modernized system will also support the sharing of land-related information among government agencies to address key development challenges, including private sector development, climate change adaptation, and disaster risk mitigation," she said.

The World Bank official also expressed satisfaction that the World Bank was able to help Croatia in connecting historic buildings, such as the new Zagreb Land Registry Office, with modern and smart architecture and design through reconstruction.

"This paves the way for a modern and reformed judicial system and land registry, truly benefiting Croatian citizens and the whole economy," she said.

The World Bank has been a partner to Croatia for 29 years. During this period, the Bank has supported more than 50 projects, totaling almost $5 billion, produced numerous studies, and provided technical assistance to help strengthen institutions and support the design of policies and strategies. The Bank's current program focuses on mitigating the economic and social impacts of COVID-19, post-earthquake reconstruction, education, social policy and pensions, transport, justice, innovation, business environment, land administration, circular economy, solid waste management, science and technology, and economic development of the Pannonian region, the World Bank recalled in its statement.

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ZAGREB, 24 March 2022 - Physical Planning and Construction Minister Ivan Paladina and the director of the Zagreb-based KBC - University Clinical Hospital, Ante Ćorušić, on Thursday signed an agreement on the €70 million "Stage III" reconstruction project of this hospital.

A new multi-purpose building will be constructed within the existing hospital compound and the funds earmarked for the construction and reconstruction has been secured with a loan from the World Bank. 

The new hospital will be over 27,800 square metres large, and will have eight floors with an open parking lot on five levels and an emergency heliport.

Paladina underscored that the project is an example of quality and concrete cooperation between the KBC hospital, the competent ministry and expertise.

"When we have a clear common objective and when everyone involved in the project gives a maximum contribution then things function. This is in fact a positive example of what we want to apply to all other post-quake reconstruction procedures with an even greater active participation of the state and profession, and citizens themselves," Paladina said.

Ćorušić underscored that Stage III is part of a strategic document for the KBC's development for a ten-year period and that in 2018 a feasibility study had already been conducted regarding the relocation of the Šalata Hospital to the Rebro KBC.

The project was delayed because of the earthquake but now we have obtained a World Bank loan of $81.8 million and an additional €25 million through the National Recovery and Resilience Plan, said Ćorušić.

Politics: For more, check out our politics section.

July the 16th, 2021 - The new director of the World Bank in Croatia is Jehan Arulpragasam, succeeding Elisabetta Capannelli, whose four-year term expired back in June.

As Poslovni Dnevnik/Ana Blaskovic writes, the new World Bank in Croatia director, who is also taking the same position for neighbouring Slovenia, will head the Zagreb Office and oversee the strategic, analytical, operational and advisory programme of the World Bank in Croatia and Slovenia.

Jehan Arulpragasam otherwise holds a bachelor’s degree in economics from the prestigious Cornell University and then a master’s and a doctorate from the University of North Carolina, USA.

He comes to Croatia with 35 years of vast experience in the field of international development in more than 40 countries under his belt, with more than 10 years of experience in managing the World Bank's large credit and analytical programmes.

"In his work, he is focused on inclusive growth and human development, which covers a wide range of topics ranging from macroeconomic and fiscal policies to structural sectoral reforms and social policy," the statement on his arrival in Croatia said.

After the Republic of Croatia was classified as a high-income European Union country according to the World Bank criteria (which might shock a few), the institution's strategy and approach changed somewhat.

The current programme of the World Bank in Croatia is primarily focused on mitigating the economic and social consequences of the ongoing coronavirus pandemic, post-earthquake reconstruction for the City of Zagreb, Zagreb County and Sisak-Moslavina County, transport, justice, innovation, business environment, the land registry system, science and technology and the economic development of the often overlooked Pannonian Croatia.

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ZAGREB, 14 July, 2021 - Economist Jehan Arulpragasam has been appointed the new World Bank Country Manager for Croatia and Slovenia, the World Bank Office in Croatia announced in a statement on Wednesday.

In this position, he will lead the World Bank Office in Zagreb and oversee the World Bank’s strategic, analytical, operational and knowledge program in both countries.

Mr. Arulpragasam is an economist with 35 years of experience working in international development in over 40 countries world-wide. His work has focused on inclusive growth and human development, covering a range of issues from macro-economic and fiscal policy to structural sector reform and social policy.

The World Bank's current program in Croatia focuses on mitigating the economic and social impact of COVID-19, post-earthquake reconstruction, transport, justice, innovation, business environment, land administration, science and technology, and economic development of the Pannonian region.

The World Bank has been a partner to Croatia for over 27 years. During this period, the Bank has supported more than 50 projects, worth almost US$5 billion, produced numerous studies, and provided technical assistance to help strengthen institutions and support the design of policies and strategies, the statement said.

For more about politics in Croatia, follow TCN's dedicated page.

ZAGREB, 15 June, 2021 - Prime Minister Andrej Plenković on Tuesday expressed satisfaction with the World Bank's support to Croatia's efforts to reconstruct the areas hit by the 2020 quakes, and with cooperation in projects aimed at facilitating the recovery of the private sector's exporters affected by the corona crisis. 

A press release issued by the government notes that the premier held a meeting with World Bank Vice President for Europe and Central Asia, Anna Bjerde, and a few other WB officials in Government House.

On that occasion, Plenković expressed satisfaction with the cooperation with the World Bank and the support that institution had provided to Croatia in the reconstruction since the earthquakes had struck Zagreb and Sisak-Moslavina County in March and December 2020.

He was quoted as saying that he was satisfied with the permanent cooperation in projects aimed at helping exporters in the private sector to recover from the consequences of the coronavirus pandemic.

The prime minister in particular thanked the World Bank for its support until now in preparing Croatia's 2021-2026 National Recovery and Resilience Plan. He underscored the importance of fostering further cooperation and the implementation of projects for Zagreb's reconstruction and revitalisation of the Banovina area in Sisak County, the press release said.

In June last year the World Bank approved two $500 million projects to provide urgent support to the government in an attempt to relieve the impact of the tremors that hit Croatia and of the lockdown caused by the COVID-19 pandemic.

The World Bank also provided technical support in preparing a Rapid Damage and Needs Assessment (RDNA 2020), which was an important document to mobilise €683.7 million from the EU Solidarity Fund. The World Bank also provided technical assistance in the RDNA for the earthquake-struck areas in Sisak-Moslavina County.

Bjerde was accompanied at the meeting by World Bank's Country Director for the European Union Gallina Andronova Vincelette, the World Bank's new country manager in Croatia Jehan Arulpragasam, and Special Assistant at World Bank Group Fanny Weiner.

For more about politics in Croatia, follow TCN's dedicated page.

May 31st, 2021 - The digital market in Croatia is not fully mature, and Croatia belongs to a set of countries that could be termed "lagging fast movers," the World Bank says in a final report on the subject, as the fast internet is too expensive for Croatian Wages. 

In analyzing the ICT sector, the World Bank focused on the internet (fixed and mobile), telephony (fixed and mobile), and pay TV markets.

The World Bank explains Croatia's insufficient maturity because most revenues still come from telephony, not internet services.

In terms of the Digital Economy and Society Index, Croatia is below the EU average in terms of digital performance and service usage, but their rate of improvement is above it. 

As for fixed internet, Croatia has the opportunity to additionally accelerate its performance because the fixed broadband coverage is better than in comparable countries, but that is not reflected in usage.

Croatia is markedly below average in actual access despite coverage in terms of fast service (at least 30 Mbps download). As for ultrafast fixed internet (100 Mbps), Croatia is below average in terms of coverage and service usage.

Although Croatia has made progress in recent years regarding the take-up of fast fixed broadband service, "urban take-up is still more than twice that of rural take-up."

The report also says that "Croatia performs particularly badly with respect to rural penetration in comparison to other EU countries and remains far from the 100 percent EU household take-up target for 2020."

Affordability is one reason for Croatia’s underperformance regarding fixed broadband take-up and overall digital market assessment. The World Bank says that in terms of affordability, Croatia is quite below most EU countries.

For more news about Croatia, follow TCN's dedicated page. 

ZAGREB, 15 May 2021 - The World Bank Board of Directors on Friday approved a loan to the Croatian Bank for Reconstruction and Development (HBOR) in the amount of €200 million for the HEAL Croatia Project (Helping Enterprises Access Liquidity in Croatia), the World Bank said on Saturday.

The loan will provide liquidity and financial restructuring to firms that have been hit by the COVID-19 pandemic and by the two devastating earthquakes of 2020.

"The approval of this Project is very important as it provides support to companies affected by the crisis caused by COVID-19 pandemic, thus ensuring the preservation of jobs and providing an incentive for economic recovery. The additional benefit is that it will attract commercial banks to finance the private sector and facilitate financing from other international financial and contribute to increasing the operational efficiency of HBOR. It is important to emphasize that the World Bank provides this Project under very favorable conditions," said Finance Minister Zdravko Marić.

To mitigate the multiple effects of the pandemic, the Project will support firms focused on export, both small and medium enterprises (firms employing fewer than 250 people) and mid-caps firms (employing from 250 to 3,000 people).

The Project will increase access to finance for firms from less developed regions of Croatia, women-owned or managed firms, and young enterprises (operating less than five years). The Project will also support HBOR’s continued development through improved business processes, strengthens sustainability and climate change resilience, and use of EU funds.

"Favorable terms and conditions granted by the World Bank will provide us an additional source of finance for further favorable loans to our entrepreneurs. In addition, the World Bank, as the leader in the field of environmental and social management, will support HBOR in enhancing its own Environmental and Social Management System. This will be important as HBOR's activities in the coming period will be particularly committed to building more capacity for supporting sustainable projects and inclusive growth," said HBOR Management Board president Tamara Perko.

The HEAL Croatia project complements two other World Bank crisis operations approved last year, the Croatia Crisis Response and Recovery Program and Earthquake Recovery and Public Health Preparedness Project - worth together $500 million, to help mitigate the effects of the economic shock, advance recovery, facilitate earthquake reconstruction and strengthen national systems for public health preparedness for pandemic outbreaks.

"The HEAL Croatia project will contribute to a resilient, inclusive and sustainable recovery of Croatia, which has been hard hit by the global pandemic, the economic recession, and the devastating earthquakes of March and December 2020," said Elisabetta Capannelli, the World Bank Country Manager for Croatia.

"We expect the HEAL project to help preserve jobs and support household livelihoods through direct support to approximately 150 firms employing around 25,000 people. It will also help firms led by women, young firms and firms that operate in less developed regions to address issues related to longer-term access to financing," she added.

In the past 27 years, the World Bank has supported more than 50 projects in Croatia worth almost $5 billion, produced numerous studies, and provided technical assistance to help strengthen institutions and support the design of policies and strategies.

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ZAGREB, 8 April, 2021 - Documents resulting from the Strategic Transformation in Agriculture and Rural Space (STARS) project will help determine how around five billion euros that have been made available for Croatia's agricultural sector will be spent, Agriculture Minister Marija Vučković said on Thursday.

The Agriculture Ministry and the World Bank cooperated on the STARS project, and the agreement on project cooperation was signed in October 2018.

Analyses, studies and guidelines made during the project have thus been significantly used also in making a draft agricultural strategy for the period until 2030, which has been put to public consultation, and in making a national aquaculture development plan for the period 2021-2027. Both documents are aimed at enhancing the sectors' competitiveness and adapting them to current conditions.

Numerous domestic and foreign experts, sector stakeholders, employees of the Agriculture Ministry and other Croatian institutions and universities cooperated on the project, with Vučković noting that the start of work on the project had coincided with debates about the future of the EU's Common Agricultural Policy, which will affect financing priorities and development of agriculture in all member states.

The project served to reexamine the situation and needs of the Croatian farm sector, as well as the measures that are being implemented, and its documents will be used in deciding how the roughly five billion euros intended for Croatian agriculture will be used, Vučković said.

Great chances for development of Croatian farm sector

Project coordinator Svetlana Edmeades of the World Bank said that the World Bank strongly believed that Croatia had great chances for the development of its farm sector.

Farm producers have central place in the project, which identifies as national strategic goals an increase in productivity and in the resilience of farm production to climate change, stronger competitiveness of the agricultural and food sector, revival of rural economy and improving living conditions in rural areas.

Edmeades underlined the importance of knowledge and innovations, noting that the development of Croatia's agriculture should be green, resilient and inclusive, which includes, among other things, production of organic food, sector resilience to shocks, as well as greater involvement of smaller producers in existing value chains.

She said the project achievements were a number of reports that should serve as guidelines for the ministry and farm producers towards a green, resilient and inclusive agriculture.

The World Bank official said that the analyses were expected to significantly contribute to the government's programme with regard to specific targets in the farm sector, in the making of a national agricultural and rural development strategy, participation of agriculture in the national recovery and resilience plan, and national strategic planning within CAP.

Value of agricultural production to be raised to HRK 30bn by 2030 

State secretaries Tugomir Majdak, Zdravko Tušek and Šime Mršić presented the draft agricultural strategy for the period until 2030 and the national plan for the development of aquaculture in the period 2021-2027.

The officials said that the projected effects of the strategy until 2030 were an increase in labour productivity of 60% and the consequent increase in the value of farm production to HRK 30 billion, for which funds in the amount of €7.5 billion were envisaged.

This should be achieved, among other things, by a 35% increase in the number of locally bred fattening pigs, a 20% increase in cattle breeding, expanding areas under permanent crops by 5,000 hectares and areas where crops are grown under glass by 500 hectares, a 20% increase in the share of the food industry in GDP and a 30% increase in the number of producers in short supply chains.

The national plan for the development of aquaculture in the period 2021-2027, which is being made, will put emphasis on stronger competitiveness and the creation of 15% more jobs in the rural and coastal economies in the aquaculture value chain, including an increase in total production volume of 30%, a 35% increase in added value in the processing of aquaculture products, and an increase in the average annual consumption of aquaculture products per capita by as much as 50%, the Agriculture Ministry said.

For more about politics in Croatia, follow TCN's dedicated page.

ZAGREB, 15 January, 2021 - Construction Minister Darko Horvat said on Thursday that around HRK 12 billion had been secured through the EU Solidarity Fund, World Bank loans and the state budget for the reconstruction of areas hit by last year's earthquakes.

Speaking in an interview with the HTV public broadcaster, Horvat said that clear rules on how to organise reconstruction would be published in the Official Gazette within a month from the earthquake that hit Sisak-Moslavina County on 29 December.

He added that the government still did not have a complete financial framework for reconstruction but that so far HRK 12 billion (€1.6 billion) had been secured.

"Some sources are known and some we are still trying to secure. Around HRK 12 billion has been secured - through the Solidarity Fund, World Bank loans, the budget. As part of the National Recovery Plan we will also seek.... grants as well as loans," the minister said.

The Croatian government earlier on Thursday formulated amendments to the Act on Post-Earthquake Reconstruction, originally intended for the City of Zagreb and Zagreb and Krapina-Zagorje counties, hit by a 5.2 magnitude quake on 22 March 2020, to make the law refer also to the post-earthquake reconstruction of Sisak-Moslavina and Karlovac counties.

The reconstruction of buildings destroyed in the 29 December earthquake in Sisak-Moslavina and Karlovac counties will be fully financed by the state.

Bosnian Croats to finance reconstruction of one institution, houses

Leaders of the Croats in Bosnia and Herzegovina said on Thursday they would finance the reconstruction of one state institution as well as build family houses in the quake-hit areas of Croatia.

This was agreed at a meeting in Mostar between the leader of the HDZ BiH party, Dragan Čović, and local officials from a number of towns and municipalities in the neighbouring country and visiting Croatian state secretaries Zvonko Milas and Nikola Mažar.

Solidarna foundation raises HRK 8.4 mn for quake-hit area

The Zagreb-based Solidarna foundation earlier this week reported that it had raised more than HRK 8.4 million (€1.12 million) for Sisak-Moslavina County.

Some of the donations paid into the foundation's 5.5 Fund have already been used to buy consumables for people affected by the earthquake and the foundation also plans to participate in the long-term reconstruction and recovery of the quake-hit county.

The 5.5 Fund was established by the Zagreb Earthquake Relief civic initiative and the Solidarna foundation after the 22 March 2020 earthquake in Zagreb. At the time, the foundation raised HRK 1.5 million for earthquake victims. It reactivated its fund after the earthquake in Sisak-Moslavina County and its fund-raising campaign is still underway.