Over the next year, Croatian companies will be among the EU companies hardest hit by the consequences of the war in Ukraine, the European Investment Bank (EIB) says in its latest report.

“Firms in countries closer to Ukraine and Russia, such as Hungary, Poland, Latvia and Lithuania, will feel the pressure. Moreover, firms in Greece, Croatia and Spain will also be more affected than the EU average,” says the report, entitled “How bad is the Ukraine war for the European recovery?”

The EIB published a ranking of countries whose companies face the greatest risk from the current situation. The most vulnerable companies are those in Greece, while those in Croatia rank seventh in terms of the risk of losses and bankruptcy among the 27 EU member states.

The EIB noted that EU companies, particularly small ones, were already weakened by the Covid-19 crisis.

“The war will exacerbate firms’ vulnerability through three channels: (1) a reduction in exports, (2) lower profit due to higher energy prices, and (3) difficulty finding funding as banks avoid risk,” the report says.

According to the EIB, Croatian companies will be mostly affected by increasing energy prices.

“Firm-level simulations conducted by the European Investment Bank (EIB) suggest the proportion of firms losing money will increase from 8% to 15% in one year, and that the share of firms at risk of default will rise from 10% to 17% over the same period,” the bank said.