ZAGREB (Croatia), May 9 (SeeNews) – Fitch Ratings has announced that it has affirmed Croatia’s long-term foreign currency issuer default (IDR) rating at “BBB” with a positive outlook, as it believes the Adritic country is on track to achieve its goal of joining the Eurozone next year.

“The positive outlook reflects our expectation that Croatia will be able to join the euro in January 2023, due to significant progress in meeting the convergence and reform criteria under the Exchange Rate Mechanism II , and political support at the broader eurozone level for Croatia’s membership,” Fitch said in a statement on Friday.

Croatia has met all structural reform criteria required under ERMII and currently meets most convergence criteria, including interest rate, exchange rate and public finance, Fitch said. . Questions remain about compliance with the price stability criteria, particularly in the context of rising inflation in recent months, reaching 7.3% in March, its highest level since 2008, and a average of 4.07% in April 2021-March 2022.

“However, we believe that the EU will use the flexibility offered by the convergence criteria (by removing the inflation rates of certain Member States which it considers to be outliers of the calculation) when assessing Croatia in May, with a likely positive result by July At present, we do not expect a delay of more than a year in joining the euro if the country does not meet the criteria for inflation this year, as we consider that there is a clear commitment at EU level to accelerate the process,” the rating agency said. .

Fitch expects economic growth to slow to 3.3% in 2022 from a peak of 10.2% in 2021 due to base effects and a sharp slowdown in household consumption, with high inflation affecting consumer spending. consumption. A slowdown in major trading partners, primarily the Eurozone, will affect the performance of goods exports this year, but Fitch expects key service sectors such as tourism to continue to recover given the structural benefits of the country.

“We project an acceleration in GDP growth in 2023 (3.7%) assuming a reduction in external risks and a recovery in investment momentum, driven by EU programs. We estimate transfers from l EU up to 5 pp of GDP per year over the next four years, which will support economic momentum,” according to the rating agency.