ZAGREB (Croatia), April 11 (SeeNews) – The World Bank has announced that it has lowered its forecast for Croatia’s gross domestic product (GDP) growth in 2022 and 2023 – to 3.8% and 3.4%, respectively – with significant downside risks related to the pandemic and the war in Ukraine.

The latest forecasts for the Adriatic country’s economy for this year and next have been cut by 1.6 and 1.0 percentage points, respectively, from forecasts made by the World Bank in January.

“Growth is expected to moderate over the medium term but will remain above the pre-pandemic trend,” the global lender said in Europe and Central Asia Economic Update, Spring 2022 Report released on Sunday.

“While global uncertainty related to the war in Ukraine is high, the Croatian economy could grow by an average of 3.5% per year over the period 2022-2024,” he added. Investment activity supported by the inflow of EU funds is expected to recover strongly in 2022 and moderate thereafter. Exports of goods and services are expected to support growth, but the pace of growth is expected to slow as tourism returns to pre-crisis levels and foreign demand moderates.

Growth in personal consumption could remain around 2.5% in a context of rising employment and wages. However, the positive effects of higher wages on personal consumption will be partly offset by higher inflation. Overall, inflation in 2023 and 2024 is expected to moderate as global supply bottlenecks ease and financial conditions tighten.

However, commodity price levels will remain high. The general government deficit is expected to fall below 3% of GDP from 2023. In addition, the public debt-to-GDP ratio is expected to continue falling, reaching 73.9% of GDP by the end of 2024, according to the World Bank. .

The escalation of conflicts in the region is putting additional pressure on food and energy prices, which were already on the rise. While the Croatian government quickly introduced mitigating measures to limit gas price increases, the price is still expected to increase by an average of 20%.

Last year, the Croatian economy grew by 10.4% after shrinking by more than 8% in 2020 due to the COVID-19 pandemic.

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