Bloomberg News

Croatian Economists Cut 2012 GDP Outlook, Bank Association Says

July 11, 2012

Croatia’s economy will probably contract 1.5 percent this year as the euro-area’s debt crisis curbs investment, a survey of economists by the Croatian Banking Association shows.

The average estimate of economists from Croatia’s six biggest banks in terms of assets lower than a similar forecast of a 1.3 percent contraction published in January. The banks include Zagrebacka Banka d.d., the Croatian unit of UniCredit SpA (UCG) and Privredna Banka d.d., a unit of Intesa Sanpaolo SpA. (ISP)

Economists also said the inflation rate will reach 3.3 percent this year, up from their January prediction of 2.5 percent. They also narrowed their budget-deficit forecast to 4.7 percent of gross domestic product from an earlier forecast of 4.9 percent, following the government’s fiscal cuts announced on Jan. 31.

Prime Minister Zoran Milanovic said in an interview on July 7 that Croatia’s economic-growth forecast of 0.8 percent will be “hard” to achieve this year as Europe’s sovereign-debt crisis curbs investment,

The six-month-old Cabinet led by Milanovic’s Social- Democrats made the forecast in January, planning to lure 8 billion kuna ($1.3 billion) of funds from international lenders and the European Union to modernize infrastructure.

The World Bank predicts the Balkan economy will shrink 1 percent in 2012, while the central bank on July 9 revised its forecast to 1.6 percent contraction from a 1 percent decline seen in May.

To contact the reporter responsible for the story: Jasmina Kuzmanovic in Zagreb at

To contact the editor responsible for the story: James M. Gomez at

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