Photograph: screenshot / youtube.com

Croatia needs radical reforms and the independent coalition MOST (Bridge) should be given the opportunity to form the new government and nominate a prime minister designate, Zeljko Lovrincevic of the Institute of Economics said at a conference of economists in Opatija on Wednesday.

Lovrincevic said that he was in favour of "forming, to the greatest possible extent, a government of experts and giving priority to those who have raised the issue of the content of reforms," adding that Bridge should nominate a prime minister designate.

"That should be the starting point... and both big coalitions should join in the process and contribute with their proposals," said Lovrincevic, noting that if Bridge falls apart, the notion of a third political camp in Croatia would be lost for a long period of time. "Masks will be falling down in the coming days. It will become obvious if there is interest in really doing something for Croatia's benefit or if we will be witnessing a brutal battle for ruling positions, marked by personal animosity," said Lovrincevic.

Speaking of economic trends this year, Lovrincevic said that he expected GDP to grow 2% in the third quarter this year, and to drop in the fourth quarter in relation to Q3.

"The budget deficit is set to be 4.9% of GDP and next year it is expected to stand at 4.7%," Lovrincevic said, adding that citizens' living standards had declined by around 8% in the period from 2011 to 2015, that Croatia had the highest risk premium except Greece in the EU and that big investment projects had largely been suspended.

He went on to say that public debt was expected to reach around 89.2% of GDP at the end of this year and that next year it would account for 95% of GDP. Croatia has the highest public debt of all new EU members and it is likely to continue growing, Lovrincevic said, adding that the euro was not likely to be introduced in the next 20 years. He added that it was good that tourism had managed to compensate for other weaknesses.

Lovrincevic said he expected GDP to grow 1.4% in 2016 and 1.7% in 2017, with employment growing mildly by 0.7% in 2016 and productivity increasingly slightly as well. In 2016, 2017 and in the long run Croatia will have the highest budget deficit of all EU countries, and outlays for the public sector interest will reach 4.2% of GDP in 2016, he said.

Speaking of challenges in 2016, he said those were a need to step up reforms, the refugee crisis and its impact on the economy, notably tourism, the formation of a new government and the continuation of the emigration of young people.

"The process of social euthanasia is likely to intensify and that implies a long-term loss of competitiveness, a crisis of trust in political structures, the falling apart of the institutional public infrastructure, deterioration of vital statistics and emigration. I hope that people in charge of that see that this is a problem slightly bigger than their ego," said Lovrincevic.

The head of the Croatian Association of Economists, Ljubo Jurcic, said that Croatia needed demographic investments and that the new government also had to devise a migration policy. As for the economic situation, he said that the solution was simple - policy change.

He noted that unlike some other countries, Croatia did not overcome the crisis in 2009 but "has continued to sink" in relation to the EU, countries in transition and other countries. "Politics is the only obstacle to growth. We are prisoners to unusual policies," he said.

Croatia lacks an investment policy, exports are insufficient and without tourism, Croatia would be the worst country in the region in terms of the export-to-GDP ratio, Jurcic said, noting that the state should be financed with the domestic currency, with interest not higher than 2%.

Andjelko Akrap of the Faculty of Economics in Zagreb said that a sudden change of the country's territorial organisation would be disastrous and that those making decisions on that should bear that in mind.

Projections that do not include the latest emigration trends show that if those trends continue, Croatia will have around 3.4 million residents in 2051, and there will be 900,000 fewer working-age people, Akrap said, adding that the country needs a systematic and long-term demographic policy to deal with the problem of its dwindling population.

Related stories

Latest news

Trump-style rhetoric is making world more dangerous, Amnesty says

Divisive and "poisonous" language used by politicians such as US President Donald Trump is putting vulnerable populations at risk and making the whole world a more dangerous place, Amnesty International charged on Wednesday.

Canada soon to begin resettling Iraqi refugees, most of them Yezidis

Canada will resettle 1,200 survivors of the Islamic State campaign to target religious minorities in northern Iraq, Canadian officials announced Tuesday. 

Breitbart editor resigns after release of paedophilia comments

Milo Yiannopoulos, a controversial editor at the far-right Breitbart news website, resigned Tuesday after the emergence of recordings in which he appears to defend sexual relationships between young boys and older men.

Trump administration opens door for mass deportations

The US Department of Homeland Security laid the groundwork Tuesday for mass deportations of immigrants living illegally in the United States under an executive order by President Donald Trump last month.

Brexit bill: House of Lords says public can change mind on leaving EU

The British public should be able to change their minds on Brexit - just as Prime Minister Theresa May did, the upper chamber of parliament heard Tuesday during a marathon debate on legislation to kick off EU negotiations.

Italian lawmakers, rights activists clash over gay sex club scandal

Gay rights activists and conservative politicians clashed Tuesday after the chief of Italy's anti-discrimination office quit over allegations that money had been authorized for gay sex clubs.

EU countries agree new rules to avoid tax evasion

European Union finance ministers in Brussels on Tuesday reached a political agreement on new rules to ensure that multinational corporations do not declare profits in the countries where they pay the least tax but in the countries where they generate it.

Trump condemns "horrible, painful" anti-Jewish incidents

US President Donald Trump condemned a recent spate of threats against Jewish community targets across the United States, during a visit Tuesday to the newly opened National Museum of African American History and Culture in Washington.

FinMin expects Croatia to exit Excessive Deficit Procedure this spring

Finance Minister Zdravko Maric said on Tuesday Croatia could exit the Excessive Deficit Procedure this spring and that it was showing progress in correcting macroeconomic imbalances.

Austria seeks to create jobs, but new EU immigrants need not apply

Austria plans to create 160,000 jobs in the next three years by subsidizing companies, but the project has raised concerns because it effectively excludes people who recently immigrated from other EU countries.

Juncker: Not good for W. Balkans that some in Washington want to water down EU

European Commission President Jean-Claude Juncker said on Tuesday it was not good for Western Balkan countries that some people in the new US administration gave the impression of being against the European Union because those countries needed the prospects of EU membership.

Citizens invited to help create Croatian version of Monopoly

A project to create a Croatian edition of Monopoly, in which citizens can participate by submitting proposals and which could become a souvenir for tourists, was presented at a press conference on Tuesday.

German state approves full-face veil ban

Legislation that bans face veils in select public spaces and situations was agreed by the government of the southeastern German state of Bavaria on Tuesday.

Indian restaurant Gaggan in Bangkok named Asia's best for third year

Bangkok's Indian eatery Gaggan on Tuesday was named the best restaurant in Asia for the third consecutive year by Asia's 50 Best Restaurants.

HGK: 16 Croatian companies to exhibit at IDEX defence exhibition

Sixteen Croatian companies will exhibit their products at the 13th IDEX 2017 defence exhibition in Abu Dhabi, to be held on February 19-23.