PM Plenkovic says government continues with reform process

Prime Minister Andrej Plenkovic has said that the latest European Commission's decision to revise upward its forecast of Croatian GDP growth for 2017 from 2.9 percent to 3.2 percent is a good projection of trends, stressing that the government is continuing with activities in the reform process.

"Trend projections are pretty good. In any case, we will continue with our activities in the reform process aimed at creating conditions for even better macroeconomic indicators," Plenkovic said at the government session on Thursday.

The European Commission has revised up its forecast of Croatian GDP growth for 2017 from 2.9 percent to 3.2 percent, saying that the national economy has proved resilient to the Agrokor crisis and growth is expected to pick up in the second half of the year.

"The restructuring of the distressed food-processing and retail group Agrokor – Croatia's largest private sector employer – appears to have had a smaller-than-anticipated effect on output in the first half of the year," the Commission said in its Autumn 2017 Economic Forecast released on Thursday.

The outbreak of the Agrokor crisis was the reason why the Commission had revised down its projection of Croatian growth from 3.1 to 2.9 percent in the Spring Forecast.

"Over the summer months, industrial production and retail trade volumes grew buoyantly. Tourism boomed, with arrivals and overnight stays increasing at double-digit rates.

"Coupled with strong consumer sentiment indicators, these trends suggest that the economy maintains strong growth in the second half of the year, pushing the expected GDP growth for 2017 as a whole to 3.2%," the Commission said.

Croatia's GDP increased by 2.5 percent in the first quarter of 2017 compared with the same period in 2016 and by 2.8 percent in the second quarter of the year. If the Commission's projections become a reality, this year the Croatian growth will be above the EU average, which is forecast at 2.3 percent.

Most domestic and foreign analysts expect the Croatian economy to grow at a rate of about three percent this year.

Seven Croatian analysts polled by Hina three months ago projected the growth rate at 2.9 percent. The Croatian National Bank has recently revised up its growth estimate from 3.0 to 3.3 percent.

The International Monetary Fund has revised up its forecast from 2.9 to 3.1 percent, while the World Bank kept its projection of 2.9 percent growth.

The Zagreb Institute of Economics expects the Croatian economy to grow by 3.1 percent, and the government designed its budget for this year based on an estimated growth rate of 3.2 percent.

Text: Hina

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