Bloomberg News

Croatian Economy Expands in Third Quarter on Tourism, Exports

November 25, 2011

Nov. 25 (Bloomberg) -- Croatia’s economy expanded in the third quarter as exports increased and favorable weather extended the tourist season through September.

Gross domestic product grew 0.6 percent from a year ago, expanding for the second consecutive quarter, the statistics office said today on its website, citing preliminary data. It will release detailed data on Dec. 20.

The Adriatic Sea nation, which concluded negotiations with the European Union in June and expects to join the bloc in July 2013, is recovering from a two-year recession. The economy shrank 1.2 percent last year and 5.8 percent in 2009 after growth averaged 4.6 percent a year between 2000 and 2007.

“Tourism revenue and increase in exports and domestic consumption have pushed up the economic growth,” Zdeslav Santic, the chief economist at Soc-Gen Splitska Banka d.d., said in a phone interview before the data release. “However, in the last quarter we should expect stagnation as capital investments have declined and the crisis in the euro zone is worsening.”

The economy should grow 0.7 percent for the entire year, Santic said, revising his forecast in September of 1.1 percent. Central bank Governor Zeljko Rohatinski said on Oct. 21 the growth will reach 0.5 percent in 2011, while warning that any real growth must be preceded by cuts in the public sector.

Croatia had its long-term sovereign credit rating reduced in December to one step above junk at Standard & Poor’s, which cited the country’s “deteriorated fiscal position and continuously weak external financing.”

--Editor: James M. Gomez

To contact the reporter on this story: Jasmina Kuzmanovic at jkuzmanovic@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net


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