Croatia Country Report - May, 2015

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Croatia Country Report - May, 2015

This report reviews key macroeconomic data and microeconomic developments for Croatia published between May 7 and June 7, 2015.
In the beginning of June, the Croatian Statistics Office confirmed the country’s GDP expanded by 0.5% in the first quarter of the year. This was the second quarter in a row the Adriatic country reported economic growth. Croatia’s economy declined for six consecutive years.
The EBRD said in its Regional Economic Prospects it expects the Croatian economy to grow by 0.5% this year, supported by reduced oil prices and some improvement in the Eurozone demand. The forecast was left unchanged compared to the January edition of the report.
In May, the European Commission said it is not activating the excessive imbalance procedure for Croatia, but made a set of recommendations for the country for this year and 2016 in order to ensure a durable correction of the excessive deficit.
The report provides details on the licenses the country is awarding for onshore hydrocarbon exploration and contains information about Croatia’s plan to sell a stake in flagship carrier Croatia Airlines.


Table of Contents

EXECUTIVE SUMMARY 4
MACROECONOMIC OVERVIEW 5
Croatia’s competitiveness challenges to mute economic growth in 2015 - Moody's 5
EBRD keeps unchanged Croatia’s 0.5% GDP growth forecast for 2015 5
EC activates no corrective measures for macroeconomic imbalances for Croatia 6
REAL SECTOR 7
1. GDP, Inflation 7
Croatia's GDP growth confirmed at 0.5% in first quarter 7
Croatia's consumer prices edge down 0.1% y/y in April 8
Croatia's agricultural producer prices drop 3.8% y/y in first quarter 8
Drop in Croatian producer prices deepens in April 8
2. Industry and Trade 9
Growth in Croatia's industrial output slows in April 9
Growth in Croatia’s industrial sales accelerates in March 10
Croatia's retail sales growth accelerates in April 11
3. Labour Market 11
Croatia’s unemployment rate falls in April 11
Croatia’s average net monthly salary rises by real 3.9% y/y in March 12
4. Tourism 12
Tourist arrivals to Croatia rise 3.2% y/y in April 12
FISCAL SECTOR, MONETARY POLICY 13
Croatia sells €180.8mn worth of kuna T-bills, beats target 13
Croatia's M4 money supply up 2.2% y/y to €37.3bn at end-April 13
FINANCIAL INTERMEDIATION 13
Croatia to seek investors to participate in HPB capital hike 13
Zagreb bourse’s turnover falls 20.7% m/m to €25.7mn in May 14
Croatia’s Banka Splitsko-Dalmatinska raises stake in Slatinska Banka 14
RBI’s net profit in Croatia down 18.6% y/y in first quarter 14
Croat factoring companies after-tax profit up 13.6% y/y in first quarter 15
Net assets of Croatian open-end investment funds flat m/m in April 15
Croatian mandatory pension funds’ assets up 21.9% y/y in April 15
Value of new contracts signed by Croatia’s leasing firms down 6.7% y/y in first quarter 15
Croatia’s Supreme Court upholds decision on Swiss loan dispute between banks and consumers 16
Hungary's OTP Bank says profit of Croatian unit drops in first quarter 17
Croatia investigates 14 citizens with €224.4mn in savings in banks abroad 17
UniCredit says net profit in Croatia jumps 34.3% y/y in first quarter 17
Croatian insurers' premium income rises 5% y/y in January-April 18
EXTERNAL SECTOR 18
Croatia's 2014 trade gap narrows 1.7% - final data 18
Croatia’s gross foreign debt rises 2.7% m/m in February 19
Croatia's trade gap widens 0.3% y/y in January-March 20
STRUCTURAL REFORMS 20
Croatia's LNG Hrvatska gets 12 non-binding bids for capacity allocation on planned LNG terminal 20
Croatia to award six licenses for onshore oil/gas exploration 21
Croatian flag carrier Croatia Airlines plans to sell stake for €50mn 22
Croatia’s Adris Grupa signs deal to sell tobacco unit TDR to British American Tobacco 22
Croatia’s HEP, Germany’s RWE plan new joint venture 23
Croatia to offer Hungary’s MOL new shareholder deal on oil/gas firm INA “very soon” 23
POLITICS 24
Former Croat transport minister charged with corruption, abuse of office 24
Croatia’s opposition HDZ Party keeps leading position with 29.4% backing - poll 25

Number of pages: 26
Release Date: Mon, 08 Jun 2015