The European Commission's Summer Economic Forecast states that the European economy has grown for seven consecutive years - something that is visible in all member states. However perspectives are not as sure as previous indicators.
Global trade tensions, especially between the USA and China, as well as political instability in some parts of the world could overshadow economic growth in the coming period.
The commission foresees an unchanged GDP growth in the European Union on the whole of 1.4% and 1.2% for countries in the Eurozone.
Forecasts for Croatia are good. Real GDP growth should amount to 3.1%, salaries and employment will continue to grow, as well as personal spending, while inflation will remain low.
The main driver of growth was and remains domestic demand, partly due to an increase in household spending and partly due to strengthening of the investment climate in the country. Exports have also increased even though a slight drop was seen in the last two quarters.
In 2019 further strengthening of investments are expected, partly due to better use of European Funds and lower interest rates.
An increase in material exports is expected, along with a decrease in export of services, in which tourism is the primary service, because international competition in the tourist sector has significantly increased.
In 2020 a slight drop in the GDP is expected, bringing it to 2.7%. The employment rate could be more moderate, while unemployment is at a record low. Considering the chronic lack of workers in certain sectors, salaries could continue to grow while inflation in 2019 will remain low at 0.19 percent.
“I would say that it is a good thing that the correction for Croatia is practically among the three biggest in the entire European Union. For Hungary, Romania and Croatia the forecast was corrected from an original estimated 2.6% to 3.1% for this year, which I think is mostly due to the influence of that result from the first quarter when we had an economic growth of 3.9%. I will continue to say that the key challenge for us in the field of economic growth is how to increase the contribution of work and so called overall productivity,” said Finance Minister Zdravko Marić.
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