Ćorić on measures: "I don't see a situation in which Croatia could enter a recession"

I don't see a situation in which Croatia could enter a recession, said Deputy Prime Minister and Minister of Finance Tomislav Ćorić for Croatian Radio show "A sada Vlada" (Now the Government), speaking about fears that the government's new anti-inflation measures could lead to a recession.

Tomislav Ćorić said that the Croatian economy has been recording relatively high economic growth rates for years.

“This inflationary situation that occurred and escalated at the beginning of this year, primarily due to events in the Middle East, on the other hand, combined with the overheating of the economy, which is a term that is very often used in these monetary spheres, has led to inflation rates in Croatia being slightly higher than the EU average, or the Eurozone, and the Government has decided to address this situation, this domestic part of the problem, by reducing the overheating of the economy in a way that through the anti-inflationary package of measures that we created and presented to the Croatian public, we have touched on a number of components of aggregate demand, and with the aim of calming them on the one hand, on the other hand, due to anomalies that have been observed in certain parts of the system, we have proposed certain tax changes,” said Ćorić.

He added that the liquidity of the banking system in Croatia is relatively high, with good capitalization, while on the other hand the economy generates high added value.

“And I do not see this situation in which Croatia could enter a recession, or any of the sectors,” said Ćorić.

He also said that they expect that the anti-inflationary measures will make this inflation rate a thing of the past by this time next year.

Referring to the criticism of state spending, Ćorić said, among other things, that by far the most significant part of the anti-inflationary package relates to redistribution and rationalization on the part of the state.

Regarding the two taxes related to flat rates and short-term rental in tourism, he said that the total effects are below 80 million euros and that it is not about filling the state budget because these are not revenues from the state budget, but from the budgets of local self-government units.

“Criticism with the thesis and the idea that the state wants to settle its side of the budget in this way simply does not stand,” he said.

Tax on excessive gross margins

Among other things, Ćorić spoke about the announced tax of 50 percent on excessive gross margins.

“In the past period, we have observed a phenomenon in which these relatively high inflation rates were accompanied by hunting in the dark by certain legal entities in Croatia, where, without clearly determined costs and the needs that accompany it, prices were raised primarily for goods in certain sectors, or for certain legal entities. We cannot generalize because there are simply weeds in every wheat field,” he said.

He added that certain legal entities had unjustifiably increased their margins and that they thought this was the best way to address this.

He emphasized that the tax would affect all legal entities.

He also commented on the high prices of food.

“On the one hand, price increases due to the increase in the price of energy sources, that is, those inputs for production, are certainly justified and could not have been avoided, however, there could probably have been a slightly smaller increase in prices, but, unfortunately, we simply live in times in which many are oriented primarily towards their own profit and gain, and on the one hand, no one can be blamed for that, but on the other hand, there should really be a measure in all of this,” said Ćorić.

When asked whether the state has the tools to set that measure for them, he said that it is possible to set a maximum margin in certain sectors, which they did with the distribution of oil and oil derivatives, but that it is much more difficult with consumer goods, and that he is not sure that it would have an effect.

Source: HRT