The European Bank for Reconstruction and Development (EBRD) on Thursday revised downwards its forecast of the growth of Croatian economy this year, warning about possibly weaker tourism results due to lower demand in Western Europe and North America because of the war in Ukraine.

The war will have a severe impact on economies far beyond the immediate area of the conflict, the EBRD said, highlighting a serious risk of disruptions in supply chains from Ukraine in Central Europe and the Baltic states.

Croatia, Greece, and Bulgaria are in the group of countries which will be affected by the war in Ukraine primarily in tourism.

Tourism-dependent countries, such as Croatia and Greece, “could suffer from a general drop in tourist appetite of Western European and North American countries because of higher costs and/or perceived heightened risks of spillovers from the conflict.”

The EBRD now forecasts that Croatia’s economy will grow 3.2 percent this year, one percentage point less than it its November forecast. Next year growth is expected to increase to 4 percent.

In 2022 and 2023, Croatia would be near the average of the group of Central European and Baltic states whose 2022 growth forecast the EBRD has lowered by 1.4 pp to 3.4 percent. The growth forecast for 2023 is 4.2 percent.