The excessive imbalances of Croatia's economy which it experienced in 2018 are no longer termed "excessive," the European Commission said on Wednesday in its European Semester Winter Package, a regular report used to assess EU member countries' economic progress.

The European Semester report also serves as a tool that the European Commission uses to coordinate economic policies of EU countries to fend off future crises.

In 2014, the European Commission had inducted Croatia into the category of EU countries in the excessive deficit procedure (EDP), with Zagreb managing to get de-listed in 2017.

The latest report, released on Wednesday, said that although the country’s economy made some progress, it is still marked by “imbalances.”

“Economic developments have been contributing to a gradual correction of existing imbalances, notably those related to high stocks of public, private, and external debt, and in that way leading to a reduction of risks… Policy action and commitments that would help a sustainable correction of imbalances have been stepped up recently, and their full, swift and effective implementation will be crucial,” the report said.

However, the European Commission warned that remaining vulnerabilities are linked to high levels of debt, although the debt levels seem to be shrinking over the past few years, supported by robust nominal growth.

“The negative net external position remains large, but has been improving due to continued current account surpluses,” the European Commission added.

“Private sector deleveraging is ongoing, though its pace is set to abate as credit growth and investment recover. The budget balance has been in surplus since 2017, and public debt has declined notably since its 2014 peak,” the European Commission said.

“The foreign currency exposure of corporations and households has reduced, but remains a vulnerability. Policy action has been stepped up with the adoption of a pension reform and new legislation to improve the fiscal framework. Other relevant policy measures are in the pipeline and their thorough implementation remains crucial for strengthening the resilience of the economy,” the report added.

In its latest document, the European Commission identified nine more EU countries with notable economic imbalances – Bulgaria, France, Germany, Ireland, Romania, the Netherlands, Portugal, Spain, and Sweden.

In addition, three countries – Cyprus, Greece, and Italy – were labelled as having excessive imbalances.

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