ECONOMIC OUTLOOK: EC Spring Forecast – External Demand Drives Croatia’s 2015 GDP Growth by 0.3%
In its Spring Economic Forecast published on 5 May, the European Commission (EC) forecasts all EU member states to record growth of GDP in 2015, except Cyprus (-0.5%). Regarding Croatia, the EU executive revised its initial forecast of the country’s GDP growth for 2015 from 0.2% to 0.3%, and 1% to 1.2% for 2016.
The International Monetary Fund (IMF) released a similar forecast for Croatia last week, forecasting the country’s GDP to rise 0.5% in 2015. The IMF projects a gradual economic recovery to growth rates of 1.5% to 2% in subsequent years.
Both the EC’s and the IMF’s outlooks confirmed the opinion that Croatia is emerging from recession, although at a snail’s pace. Regarding the EC’s report, the upward revision was attributable to the improved growth prospects in Croatia’s trading partners, partially offset by additional fiscal consolidation measures. The EC states the timid recovery is fragile, since it relies exclusively on external demand. Correspondingly, a 6% increase in exports last year is directly related to the improved external demand.
Commenting on the figures, EU Commissioner for Economic and Financial Affairs, Taxation and Customs, Pierre Moscovici, said while the growth this year would be nominal, it should accelerate in 2016, due to increased EU funds absorption. In terms of public finance, Croatia’s budget deficit was 5.7% in 2014, while the deficit is expected to be 5.6% and 5.7% in 2015 and 2016, respectively. Moscovici expressed his hope that the situation with the country’s deficit would remain stable…