IMF predicts an 8 percent to 10 percent economic decline for Croatia

Members of the IMF International Monetary Fund mission, led by Srikant Sheshadri, held virtual talks with Croatian Deputy Prime Minister and Finance Minister Zdravko Maric, Croatian National Bank Governor Boris Vujcic and other state officials and private sector representatives. They pointed out that the new wave of the pandemic still represents significant challenges for Croatia, and that economic policy measures should be adjusted to the crisis and that further VAT reductions are not recommended without appropriate measures to prevent permanent loss of income.

Members of the IMF Mission said that they expect the Croatian economy to fall between 8 and 10 percent this year due to reduced domestic and foreign demand, and especially due to a 50 percent reduction in the physical volume of tourism per year. The IMF pointed out that public debt could rise again to 88 percent of GDP this year, and the general government budget deficit of 8 percent of GDP due to lower tax revenues and fiscal support measures for those affected by shocks. But they also expect economic growth to recover to about 6 percent in 2021, driven by a partial recovery in tourism and greater public investment, but notes that the forecast is subject to significant pandemic uncertainty.