engleski

Croatia: Economy

The sharp recession has completely changed the economic outlook in Croatia. Before the onset of the crisis economic growth was based on a rapid increase in domestic demand, fuelled by abundant capital inflows and expansion in the construction industries. Industrial production further fall 1.5% in 2010. A modest economic recovery took place in the production of energy (+2.5%) and non-durable consumer goods (+1.8%). Industrial production as a whole continued to fall in the early months of 2011 with a sharp reduction on 6.7% in January compared to the same month the previous year.Economic growth in Croatia depends largely on economic performance in the EU, which is its largest trading partner, and on the continued expansion of the tourism sector. Both of these sources of growth are endangered by the impact of the global economic crisis. Rising global interest rates increased the cost of servicing the external debt and may give rise to financial instability in the future. Future growth could be accelerated, should Croatia take steps to increase its competitiveness by reducing subsidies to large industries, reforming its public services and expenditure, improving the environment for the formation and development of innovative new small businesses, and reforming the education system to increase the skill levels of the work-force. As for the external factors, concluding negotiations with the EU this year and approaching full EU membership could significantly benefit the economy leading to a recovery in foreign direct investment and a faster rate of economic growth.

Croatia; Economic Development, Economic Perfomance, Economic Outlook

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