A three-year convergence programme the government adopted on Thursday projects a 2.5% growth for this year, 2.4% for 2020 and 2.3% for 2021 and 2022. The 2018-21 convergence programme projected that GDP would grow 2.8% in 2018, 2.7% in 2019 and 2.5% in 2020 and 2021.
The slower growth rates are the result of the convergence of GDP growth to potential GDP growth in the medium term, it was said.
According to the programme adopted today, personal consumption will be the main economic growth driver in the first two years, while the role of exports will again grow gradually. Gross investments in fixed capital, notably owing to the absorption of EU funds, will also make a significant contribution.
As for fiscal trends, a general budget deficit of 0.3% of GDP is expected this year, but a surplus of 0.2% are expected in 2020, of 0.4% in 2021 and of 0.8% in 2021. The public debt to GDP ratio is expected to decrease by an average of 3.2% to 68.5% in 2020, 65.4% in 2021 and 62% in 2022.
Presenting the convergence programme at a cabinet meeting, Finance Minister Zdravko Maric said high imports were expected to continue and that this was "one of the stronger challenges we have on the macroeconomic front, as is how to bolster domestic production and make the whole economy less import-dependent."
Maric said budget expenditures were under control. "Not even in one year did we exceed the limit we set ourselves. We stayed within limits and even made some savings."
He reiterated that the biggest unplanned shock last year came from enforced guarantees for the Uljanik shipbuilding group but said they did not exceed the limit either. "Controlling the budget's expenditures side and treating taxpayers' money responsibly, transparently and rationally is not just our obligation but also the continuation of what is expected in the years ahead."
"In each of the past three years we delivered markedly better results than what we planned, not exceeding the limits, and the entire revenue surplus has been directed towards improving budgetary results, reducing the public debt, and tax relief," Maric said.
In 2018, the public debt to GDP ratio was 74.6%, which means that in the last three years this ratio has decreased by 10 percentage points, he said. "That's a little over three percentage points per year, which puts us among the EU countries with the highest decreases in the public debt to GDP ratios."