GDP growth under 3 percent means stagnation, says analyst

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Although the European Commission (EC) has said in this week's economic forecast that Croatia's GDP would grow by 2.8 percent in 2018, inching down to 2.7 percent in 2019, a panel of economic analysts invited to analyse the forecast were less optimistic about the country's long-term outlook.

A panel of analysts were invited to discuss EC’s forecast and the slowing down of Croatia’s GDP growth and industrial production on state radio’s programme U Mrezi Prvog on Friday.

“The key problem of Croatia’s economy is that the government’s share in the national GDP is exceptionally high, making the state itself the largest generator of poverty in Croatia. We also have this acute problem of having only 52 percent of the labour force economically active, which puts Croatia at the bottom of the EU,” said economic analyst Andrej Grubisic.

Economic analyst Damir Novotny said that any GDP growth rate under 3 percent should be considered a stagnation, and compared Croatia’s economy with Slovenia, saying Slovenia was experiencing a much better upswing, due to investments.

“We have structural problems which we have failed to deal with for 20 years. The managing of economic policy has been brought down from structural to the level of daily politics,” Novotny said, and added that “Croatia is facing a long period of stagnation, because other than the tourist industry, other industries have nothing to export.”

Economist Hrvoje Stojic warned that Croatia should change its mindset in terms of the kinds of projects it develops to attract EU investments.
“What Croatia needs to change as a new member of the EU is its mindset, as there are is increasingly less EU funding available for infrastructure and rural areas. The European Union is now turning towards investing in innovation and excellence, and will also put more funding into migration programmes. Croatia should try to follow the trend and work on these kinds of projects, instead of things like the Peljesac Bridge,” Stojic said.
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