Finance Minister Marko Primorac said on Wednesday that this year's economic growth was forecast at 5.7% and inflation at 10.4%, while next year's growth was projected at 0.7% and inflation at 5.7%.

“It is forecast that next year one-third of the world will end in a recession, so we don’t have optimistic expectations,” he said at a conference on Croatia’s economic policy in 2023 in the resort town of Opatija.

The government forecasts that the public-debt-to-GDP ratio will drop from this year’s 71.3% to 69% in 2023.

Primorac said the fiscal policy in the coming period would remain flexible and that efforts would continue to be made to deal with the effects of the epidemic and the 2020 earthquakes as well as provide for Ukrainian refugees.

“Croatia is not doing badly and its outlook is not bad either,” he said, adding that the benefits of introducing the euro and absorbing money from the National Recovery and Resilience Plan (NRRP) and EU funds are reasons for optimism.

Croatia can be satisfied with the NRRP because, besides the €800 million advance, we have also absorbed a tranche of €700 million and applied for the second tranche, and intensive work is under way on meeting the 45 indicators required for absorbing the third tranche, Primorac said, adding that ten indicators have been met.

He said Croatia had the highest credit rating in its history and that this impacted borrowing costs.

The past two years have been very tough, with COVID causing HRK 40 billion in damage and the two earthquakes in 2020 HRK 130 million, the finance minister said.

The fiscal policy has been able to deal with the challenges but the possibility of intervening in the fight against inflation is limited, he added.

He recalled that targeted aid measures have been adopted to combat inflationary pressures and energy price hikes, and that the HEP power supplier is sharing the burden of the crisis by subsidising electricity prices.

Primorac underlined the need to strongly coordinate the monetary and fiscal policies, saying that harmonised action is necessary and that the monetary policy can and should help to reduce inflation, much more than the fiscal policy.

The scientific community and policy makers need to intensify their cooperation, he said.

This has been discussed at the Zagreb Faculty of Economics and the Zagreb Institute of Economics, and it seems to everyone that the link between experts and scientists, when it comes to the economy and economic policy makers, should be stronger, the minister added.

Croatian Economic Association (CEA) president Ljubo Jurcic said Croatia had been stagnating since the 1980s, since politics severed the link with science which, he added, should help in creating economic policies.

“We are making progress, but not so much when compared with others, although we live better,” Jurcic said.

Europe has created a single market so that goods can circulate as quickly as possible, but does not care whose goods they are. That’s our concern and it depends on the development of our own economy, he added.

The conference in Opatija, organised by the CEA, is taking place from 9 to 11 November. The topics include the future of Croatia’s economy in turbulent geopolitical times and uncertain economic trends, the energy future, the green economy, inflationary pressures, population issues and the availability of labour, the introduction of the euro, and a sustainable economy.