Croatia expects to see a high GDP growth rate for the third quarter of the year, and the rate for the whole of 2021 might reach 8.5%, which is above the latest projections, Croatian National Bank (HNB) Governor Boris Vujcic said on Thursday.

“The optimism is based on the strong growth of commodity exports and the rise in tourism revenues, which reached 90% of those generated in the record-breaking year 2019,” Vujcic said at a two-day conference in the northern Adriatic resort town of Opatija, organised by the Croatian Banking Association in partnership with the HNB and the Croatian Financial Services Supervisory Agency.

He said that the projections for 2022 were more moderate, as the HNB expects a GDP growth rate of 4.1%, with considerable risks to both higher and lower growth. Inflation might pick up to 2.3% this year, before slowing to 2.1% in 2022, with the main sources of inflation being rising energy and food prices.

Vujcic said that the use of EU funds would have a positive impact on GDP growth in the medium term.

“We expect a further rise in employment in 2022, given the growing demand for labour,” the central bank governor said, noting that Croatia had seen a marked rise in the import of foreign labour since 2019, with a stagnation observed during the pandemic. The figure mentioned in public is 35,000, and Vujcic said that businesses believed twice more foreign workers were needed.

Surplus liquidity in the financial system is historically high, while financing costs continue to decrease, as a result of which a further fall in interest rates on loans to companies, households and government can be expected, Vujcic said.