The Croatian National Bank's (HNB) analysts forecast the contraction of the national economy by 1.6 percent in 2012 in the latest bank bulletin, while their initial forecast for 2012 was a negative one percent.
According to the HNB bulletin, the country's GDP is likely to rebound by 1.3 percent in 2013.
The inflation rate is projected at 3.2 percent this year owing to energy price hikes, while it is expected to decelerate to 2.6 percent in 2013.
Croatia's real GDP markedly declined in the first quarter of this year in comparison to the end of 2011, when it also went down, and after a brief and weak recovery in the mid-2011, Croatia's economy slid back into recession, the central bank's analysts said.
In the rest of 2012, Croatia expects a gradual recovery of its economic activity based on stronger exports and investments. However, aggregately for the entire year, the economy is likely to contract by 1.6 percent.
The HNB projects a steady growth rise of 1.3 percent for 2013.
Croatia's general government deficit can be close to 4.6 percent of the projected GDP this year, 0.7 percent down from 2011, and it will slightly rise to 4.7 percent of GDP in 2013.
The bank pushes for the implementation of additional reforms so as to meet requirements of the Fiscal Responsibility Law.
With shipyards' debts to be taken over, the public debt is projected to rise to 51.7 percent of GDP by the end of 2012, as against 45.7 percent at the end of 2011, and the country's public debt is likely to reach 54.6 percent in 2013, the HNB warns.
