Several factors continued to this, including the low numbers of new coronavirus cases coming into the summer and Croatia’s location close to Germany and other Central European countries, making it accessible overland. Part of this was down to the recovery of tourism, as numbers of arrivals and overnight stays this summer were close to pre-crisis levels, according to data compiled by both the Croatian Bureau of Statistics and the Croatian National Tourist Board (CNTB). Raiffeisen Bank’s forecast is in line with the EBRD’s at 7%.
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The World Bank raised its forecast to an even higher 7.6% in October. The International Monetary Fund (IMF) expects growth of 6.3%, having raised its projection from just 4.7% earlier this year. Other institutions have similarly bullish projections. This growth was further exacerbated by the recovery of the tourism sector, which Croatia has repeatedly relied on, starting from late June onwards,” said Victoria Zinchuk, EBRD director for Croatia. It was supported by the steady growth of industrial production, particularly in relation to the energy sector. Growth in the first half of the year was broad-based and reached 7.5%. The onset of this growth was mainly due to the improvement in private consumption and the resilience of the export sector, especially for food and medical products. “This year Croatia’s GDP recovered much faster than expected.
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Earlier in November, the European Bank for Reconstruction and Development (EBRD) raised its forecast to 8%, up from 6% earlier, which would mean a full recovery from last year’s contraction. International financial institutions (IFIs) are now projecting strong growth for Croatia for the full year. This shows a really fast, strong and explicitly high-quality, comprehensive recovery of the Croatian economy,” the prime minister commented on November 26. “We have the biggest growth ever since Croatia exists.
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While Croatia’s performance reflected the depth of the contraction in 2020, and several EU countries have yet to report their growth for the quarter, the comparison was nonetheless by Prime Minister Andrej Plenkovic. This was the fastest among the EU member states that have reported their Q3 GDP growth so far - almost twice as high as the next ranked country, Romania, at 8%, data compiled by Eurostat shows. There was a 71.6% y/y hike in exports of services, which includes tourism services, while goods exports rose by 13.1%. The y/y rise in economic activity was seen in all sectors except government spending in Q3. The latest flash estimate for Q3 shows the recovery continued strongly over the summer and early autumn, with 15.8% growth reported for the quarter.
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On top of that Fitch Ratings just raised its rating for Croatia to its highest-ever level with Zagreb’s work towards euro adoption a key contributing factor. In stark contrast to its protracted recovery from the international economic crisis, it’s already bounding back with a broad-based recovery and is on track to achieve some of the fastest growth in the wider region this year. Croatia’s economy took one of the deepest hits from the coronacrisis in 2020 across the EU and emerging Europe regions, and the country also had to deal with two deadly earthquakes.