The EBRD forecast of Croatia's growth in 2022 puts the country among the best in Central and East Europe, Prime Minister Andrej Plenkovic said on Thursday.

The European Bank for Reconstruction and Development (EBRD) has more than doubled the growth forecast for Croatia’s economy in 2022, but it also forecasts a significant slowing down of economic activity in 2023 due to the expectation of poor demand in the euro area and the gas crisis.

The EBRD now expects Croatia’s GDP to grow by 6.5%, thus raising its May forecast by 3.5 percentage points, shows a report released on Wednesday.

Plenkovic told the cabinet today that the EBRD estimates were in line with realistic expectations.

In 2023 the economy is expected to slow down strongly, with a forecast growth rate of merely 2%, 1.5 percentage points down from the EBRD’s May forecast.

Croatia’s economy has fully recovered from the coronavirus pandemic in 2021 when GDP grew by 10.2%, with a strong contribution from personal consumption, exports and investments, says the EBRD.

In the first half of 2022 activity grew strongly again, by 7.4%, again spurred by domestic demand and exports. Personal consumption remained strong despite the average drop of real wages of 1.9%, however, consumer confidence weakened due to rising inflation, according to the EBRD.

In Q3, key support to growth and budget revenue is expected to come from tourism, considering the weakening of consumption and investments.

The EBRD believes the significant decline in growth in 2023 is connected with weak demand from the euro area.

Plenkovic also informed the government that the gas underground storage facility at Okoli was 90% full.

He said that at a meeting of EU energy ministers today, Croatia’s Economy Minister Davor Filipovic would advocate the proposal for capping wholesale natural gas prices in a bid to halt further speculations.