The World Bank's (WB) latest projections for Croatia for 2013 foresee a mild economic recovery of 0.8% compared to earlier projections of 1.5% and a decline in growth of 1.5% in 2012 compared to earlier estimates of - 1%, it was said at a presentation of the latest WB report "EU 11 Regular Economic Report" in Zagreb on Thursday for ten youngest European Union member countries including acceding country Croatia (EU 11).
The World Bank expects a modest recovery and growth of 1.3% is expected in 2013 in EU11 following an average growth of 0.9% in 2012.
The recession in the eurozone continues to impact economic results in the EU11 group the report notes.
Croatia is one of the countries of the eleven that did not record a growth in 2011 nor in 2012, and that the negative trend significantly worsened during 2012, senior economist at the World Bank Croatia, Sanja Madzarevic-Sujster said.
Expectations for Q3 2012 from the positive tourism season were overrated and suggested that growth in Q4 would indicate recession.
The WB has projected a negative growth of 1.8% in 2012 for Croatia and a possible positive 0.8% growth for this year.
The projections are based on assumptions that the situation in the eurozone will not continue to deteriorate and with Croatia's entry to the EU the investment cycle will change in the country and that Croatia will continue with fiscal consolidation and attend to a review of the 2013 budget.
Any negative scenario would mean that problems would quickly arise with regard to servicing Croatian debt and putting aside planned investments which would result in a further decline of Croatia's credit rating, Madzarevic-Sujster said.
In addition to Croatia, a fall in economic activities in 2012 was recorded in the Czech Republic, Hungary and Slovenia.
An upturn is expected for Croatia or at least a deceleration of the recession which significantly impacts the labour market.
Croatia is to enter the European Union, Madzarevic-Sujster said with relatively poor indicators on the labour market with declining employment and a significant growth in unemployment.
Unemployment in Croatia last year were around the highest recorded during the global financial crisis in most of the EU11 countries.
The report recommends decisive macro-economic steps to shore up confidence of financial markets and to remove barriers to structural reforms in economic activities. A prudent macro policy stance in the EU11 should be pursued to shore up the confidence of financial markets.
Reforms of the labour force and product markets are vital to advance productivity and competitiveness in the EU 11 region, the World Bank says in tis report.
