The International Monetary Fund (IMF) forecasts for Croatian economic growth in 2021 are optimistic, but Croatia had not only the coronavirus pandemic, but also two devastating earthquakes. Both lead to an eight percent drop in economic activity last year.
According to Croatian media, the Croatian economy has been exposed to high levels of stress caused by many factors over the past eighteen months, but it is showing resilience and its strong recovery is forecast for both this and next year, with GDP growth of 5.4 and 5.8 percent, members of the IMF Mission said in a closing statement issued Friday.
“For 2021 and 2022, a strong recovery is projected with Croatian economic growth of 5.4 and 5.8 percent, respectively, driven by the recovery in the services sector, assuming the realization of two thirds of tourist arrivals from 2019 to 2021 and almost their “In 2022, GDP growth is projected to slow to about three percent,” the IMF mission said in a statement. end of their visit to Croatia which takes place as part of regular consultations held with member states under Article IV of the IMF statute.
The IMF recalls that the coronavirus pandemic and two devastating earthquakes led to an 8 per cent drop in economic activity in Croatia in 2020 due to declining domestic and foreign demand, with a particularly large drop in tourism revenue, which reach about 60 percent annually.
However, they also point out that generous support for fiscal and monetary policy, along with the proper facilitation of supervisory requirements, has helped mitigate the effects of the coronavirus pandemic.
At the same time, they note, Croatia ‘s financial position was somewhat eased by EU funds, which financed most of the fiscal support measures, and the CNB intervened in the foreign exchange market and eased tensions in the domestic bond market by buying government securities in the amount of approximately 5.5 percent of GDP and reduced the demand for reserves and conducted repurchase operations.
Markets calmed down, especially after the establishment of an exchange line with the European Central Bank (ECB) in mid-April 2020. They also referred to inflation, estimating that it is still low despite recent growth, and they also predicted the stabilization of at 2 percent in 2023.