(Photo: Igor Kralj/PIXSELL) (Photo: Igor Kralj/PIXSELL)

Croatia's gross foreign debt of 41.1 billion kuna at the end of January 2020 contracted by 2.8 billion euros or by 6.5% on the year, according to the figures recently published by the Croatian National Bank (HNB).

However, considering the new circumstances in connection with the coronavirus pandemic that decimated the global economy, analysts expect the deterioration in Croatia's external vulnerability.

Analysts at Raiffeisenbank Austria (RBA) said that positive trends that began back in 2013 would likely be snapped, resulting in a rise in the country's gross foreign debt both in the real and nominal terms.

"Recovery and relaunching economic activity, which will require large amounts of funding, will lead to a rise foreign loans by all key sectors," said analysts.

As a result of growing debt and the expected sharp economic downturn, Croatia's gross foreign debt to GDP ratio is likely to increase, too.

At the end of 2019, Croatia's gross foreign debt to GDP ratio was 75.7%.

Source: HINA