Croatia's Economy Minister, Darko Horvat, said on Thursday that he is "very concerned" about the coronavirus outbreak and its potential impact on the country's economy.
In his comments ahead of a regular cabinet meeting on Thursday, Horvat said that although the coronavirus outbreak would certainly affect Croatia’s economy, it is still too early to say to what extent.
“We can see that Croatia’s exports have decreased in the first two months of 2019, and we will soon see how it might affect the (summer) tourist season. But we are still not expecting a recession in 2020,” Horvat said.
Asked if the World Bank might step in with emergency funding, as it had been known to do to alleviate the effects of epidemics on national economies, Horvat said that the government had already talked to the World Bank.
He added that further talks on this were expected on the sidelines of an upcoming meeting of EU ministers for competitiveness, scheduled for March 19-20 in Zagreb, where the World Bank would present measures to help reduce the effect of the outbreak on the economies of Europe and the world.
On Wednesday, the World Bank announced $12 billion in funding to countries affected by the outbreak, and the International Monetary Fund pledged $50 billion for a relief package for the same purpose.
Earlier this week, finance ministers and central bank governors from G7 nations agreed in an emergency meeting to use “all appropriate policy tools” to prevent the coronavirus crisis from damaging the global economy and possibly drive some countries into a recession.
Horvat said that Croatian companies are already seeing a negative impact.
“We are currently preparing legislation on investments to allow for a transition period in the event of a decline in economic parameters in 2020. The idea is to introduce a grace period of about three years during which users of incentives would not have to repay a portion of funding they had received until all the parameters – not just in Croatia but in Europe as well – have improved and achieved stable growth,” Horvat said.
Although only ten cases have been confirmed so far in Croatia itself, by far the worst affected European country is Italy, which reported more than 3,000 cases and 107 deaths as of Thursday. Measures to contain the outbreak are seriously disrupting life in northern Italy, and last week, the national chamber of commerce HGK warned that a prolonged coronavirus crisis might have serious knock-on effects for Croatia’s export businesses.
Italy is one of Croatia’s closest neighbours and a major trading partner, accounting for some €2 billion or 15 percent of all of the country’s exports.
Croatia’s robust tourist industry could also suffer, as some 200,000 Italians who traditionally spend their summer holidays on the eastern side of the Adriatic sea are an important source of revenue for seaside towns in Istria and Dalmatia, and the hospitality industry at large.
Meanwhile, the Zagreb Stock Exchange had recorded its largest single-day tumble in nearly nine years on Monday last week, with its main index Crobex dropping by 4.9 percent, wiping off an astonishing 5.8 billion kuna (€780 million) from stock prices.
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