Croatia's GDP is projected to grow by 0.8 percent this year according to the latest World Bank forecast released on Tuesday. The latest estimate cuts previous projections for Croatia's first year of membership in the euro zone by half, on account of the the whole euro zone "losing momentum due to energy supply problems and more expensive borrowing."

In October, the World Bank almost halved the forecast of Croatia’s GDP growth in 2023 to 1.8 percent, citing high inflation, which put pressure on real salaries, and lower foreign demand by Croatia’s key trade partners like Germany.

In the latest forecast, the World Bank said 2024 should bring a “strong acceleration of economic activity,” with growth forecast at 3.1 percent, half a percentage points more than it was forecast in October. The 2022 growth forecast has been revised from 6.4 percent to 6.6 percent.

On 1 January, Croatia joined the euro zone, and its GDP is now included in the euro zone’s, which the World Bank forecasts will stay at last year’s level. Last June, the World Bank forecast the euro zone’s GDP growth in 2023 at 1.9 percent.

“The euro zone’s economy this year will be halted by constant energy supply disruptions and a stronger tightening of the monetary policy than expected,” the World Bank said, adding that “the economy will stabilize in the second half of the year, after falling in the first.”

In 2024, economic activity in the euro zone is expected to grow by 1.6 percent, whereby the World Bank revised down its previous forecast by 0.3 percentage points. Inflation is expected to slow down amid an easing of tensions on the labor markets and a drop in energy prices.

The economy in the “Europe and Central Asia” region, which includes Croatia, has “suddenly lost momentum in 2022 and activity is expected to stagnate this year, reflecting the fall of activity in Russia and the deep recession in Ukraine in 2022.”