In the afternoon programme "Pregled dana" with Ilija Jandric on Thursday, economic analyst Ljubo Jurcic commented on Croatia's GDP growth, which is among the highest in the EU.

Jurcic explained that although the growth figures are correct, the question is what they actually reflect.

“The true state of an economy is assessed over 10 years. When a crisis occurs, this period is extended. Both Eurostat and other reports usually consider a ten-year period, but due to the recent crises, Eurostat has extended the observation period from 2005 to 2023,” he explained.

The true picture of Croatia

“Such data does not reflect the true picture of the economy. We have to wait until 2030 for that. In short, in 2020, during the pandemic, we decreased by 10 %, which does not reflect the true picture of Croatia, but then we increased by 13 % after the pandemic. Were we really that bad, and are we that good now? No, we are not,” he said.

“From 2003 to 2005, we had 5% growth, which we have not achieved to this day. We achieved that growth because we built roads – it was infrastructure investment. Now we have the opposite situation. We are not building production capacity. Instead, we rely on EU funds and the construction of housing, which we often don’t even need,” he added.

Although private household consumption is increasing, Jurcic noted that this should be seen in the context of rising wages.

“The trend in productivity follows the trend in wage growth, and then you can afford to take on debt. But it’s a bit of a mess here. After the 2009 crisis, people held back a bit, but now optimism has returned somewhat. We live in a European environment where wages are higher on average, consumption is higher and people are taking on debt because they think: ‘I’ll manage somehow’,” he emphasised.

Why are prices higher in Croatia?

As for the higher prices of food and drink compared to the European average, he pointed out that this indicates a lack of proper regulation.

“On paper, we are a state because we have a government and a parliament, but we lack the mechanisms that regulate the market. In Slovenia, which has a smaller market, prices are lower because the invisible hand of the state is much better organised than ours. We only have nice stories,” he said.

When asked when all citizens will feel an increase in the standard of living, Jurcic replied that this will happen when the state raises the general level through its economic policy.

“My students can’t find work here, but the same people earn two to three times as much in Slovenia and Austria. This shows that it is not only the quality of education that matters, but also the quality of the state. The level of wages is determined by the efficiency of the state. My answer is that we will feel growth if we create a more efficient state,” he concluded.