13:31 / 06.05.2020.

Author: Domagoj Ferenčić

EC predicts Croatia’s public debt will grow by 89%

200 Croatian Kuna (Photo: Davor Javorovic/PIXSELL)

200 Croatian Kuna (Photo: Davor Javorovic/PIXSELL)

Foto: - / Pixsell

The European Commission also predicts that the budgetary deficit will top 7.1% of GDP this year, and a sharp rise in unemployment of up to 10% in 2020.

According to the latest forecasts from the European Commission, Croatia’s public debt could grow by up to 89% of GDP as a result of the coronavirus pandemic. The European Commission’s spring economic forecast comes at a time when each member state is in danger of a serious recession due to the pandemic. In its report the commission announced that each member state faced a deep recession, but that not every state would be hit equally hard. It also noted that economic recovery for right now remained an uncertainty.

It is also believed however, that Croatia is much better prepared to face this economic crisis than it was the crisis in 2008, as macroeconomic imbalances and public debt have been drastically reduced since the 2008 crash. As a result, the Croatian economy could return to some upward trends as early as next year. This is reflected in early international and domestic forecasts, which show a sharp economic decline of 9.1% of GDP for this year and a slight recovery of 2% in 2021. The EC is forecasting that the sudden jump in unemployment this year, should decline rapidly in 2021.

The positive going into the ensuing economic crisis is that government quickly implemented safeguards, primarily to preserve jobs and ensure workers their wages. It is widely believed that this will have a positive effect on consumer spending, which is one of the primary drivers of growth.

Source: HRT

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