Croatia's central bank council on Wednesday adopted monetary policy projections for 2019-2022 and discussed expected economic developments in 2019, saying that it expected a slight slowing of the real GDP growth rate this year compared to last year.

The council also discussed recent monetary and economic developments and a report on the state of the banking system in 2018.

The monthly indicators of economic activity show a real GDP growth at the start of 2019 following a stagnation at the end of last year. The annual consumer price inflation rate picked up from 0.2 percent in January to 0.5 percent in February, mostly due to energy prices, the central bank said in a statement.

The bank continued to pursue an expansionary monetary policy and maintain a very high level of liquidity on the domestic financial market. Corporate and household lending growth picked up slightly owing to a pickup in the annual growth of general-purpose loans.

The last quarter of 2018 saw a deterioration in the balance of the current and capital account along with an increase in the net foreign debt of domestic sectors.

Favourable fiscal achievements in 2018 were to some extent offset at the end of the year by payments for guarantees issued to shipyards, but it seems that the general government budget could again run a surplus for the whole year, the statement said.

The council also discussed expected economic developments in 2019.

Given the lowered expected growth rates of Croatia’s main trading partners, a slight slowing of the real GDP growth rate is expected compared to 2018. The growth projection is more subject to negative risks due to a slowdown in economic dynamics in many countries, the statement said.

Price developments at the start of the year indicate that tax cuts on certain products, such as fresh meat, fish, eggs, fruit, vegetables, non-prescription drugs and diapers, had a somewhat stronger impact on price cuts than expected in the previous projection. That’s why the average level of prices in 2019 could be lower than expected, which in turn could bolster the growth of domestic consumption, the central bank said.