Croatia Country Report - June, 2013

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Croatia Country Report - June, 2013

June was the last month of EU accession waiting for Croatia – and as of July 1 the country joined the prestigious club of 27. Croatia joins the EU with GDP per capita at 61% of the EU average, ranking above Romania and Bulgaria which became members back in 2007. The membership opens the door to European funding and the EU already approved the first two projects in Croatia (aimed at improving waste water treatment), which will be financed from the Cohesion Funds with the amount of EUR 102.7mn.

The government in Zagreb plans to absorb EUR 438mn of EU funding by end-2013.

Croatia’s economic performance, however, remains doomed this year with the central bank estimating the contraction at 1%. Thus, 2013 will become the fourth year of recession for the Adriatic state and as of next year the economy is expected to rebound.

Croatia’s consumer price inflation accelerated to 2% in June from 1.6% in May – when it touched its lowest level since February 2012. Retail sales rose by a real 1.1% on the year in May after dropping 0.6% a month earlier. Industrial production fell 5.3% on the year in May after edging down 0.5% in April.

The jobless rate dropped to 19.6% in May from 20.9% in April in the wake of the tourism season – but was still above the 18% one registered in May 2012. The average net wage kept on shrinking in real terms – by 1.8% year on year in April after a 3.3% year on year decrease in March.

The country's current account gap dropped 15.2% year on year to EUR 1.4bn in the first three months of 2013 thanks to higher inflows from services and bigger tourism revenue in the start of the year. FDI jumped more than four times to EUR 460mn in the period as data indicated financial mediation was the most attractive sector for foreign capital in January to March. The foreign trade deficit fell an annual 1.3% in January to May after dropping by 1.6% in the first four months alone. It accounted to 6.5% of GDP versus 6.8% of GDP in January to May 2012.

Number of pages: 26
Release Date: Fri, 13 Sep 2013