The Croatian National Bank (HNB) revised upward the country's growth projection for 2016 to 2.3% from 1.8%, and it expects the growth to step up to 2.5% in 2017, according to a press release issued by the central bank after its Council held a meeting on Wednesday.  

While considering the economic trends, the HNB Council concluded that the recovery of the Croatian economy continued in 2016, at a projected growth rate of 2.3%.

The tailwinds for the positive growth are the external demand as well as a rise in all elements in domestic demand. Likewise, the rise in personal consumption can be at a higher rate this year compared to 2015, on the back of rising employment and real gross income.

The HNB Council expects positive trends to continue in 2017 and the next year's growth is forecast at 2.5%.

The economic recovery is going on against a backdrop of a declining consumer price index that can come to 0.9% due to a drop in energy prices, and in 2017 this trend in the index is expected to rebound by 1.2%.

On Tuesday, the HNB conducted the third of the four planned structural repo operations planned for this year. A total of HRK 234.4m were auctioned for a four-year term, at the interest rate of 1.4 percent. In the three structural repo operations conducted so far, the central bank placed to the banks a total of HRK 945.9m.

"By introducing structural repo operations, the HNB continues with the expansionary monetary policy it has been pursuing for years, which has helped mitigate the negative consequences of the economic crisis by boosting liquidity in the system and lowering the costs of financing for domestic sectors in Croatia. The HNB will continue to maintain the stability of the domestic currency, taking account of the important role of the EUR/HRK exchange rate in preserving the stability of prices and the banking system as a whole. In the unlikely event that depreciation pressures arise, the HNB will use the instruments available to it, including, if necessary, foreign exchange interventions and system liquidity management, to stabilise movements in the EUR/HRK exchange rate," the central bank said before the launch of these operations.

In June, HNB Governor Boris Vujcic said that the central bank would soon revise upward the country's growth projection.

"The HNB will soon release a new projection of Gross Domestic Product, which will be higher than the previous one, having in mind the first quarter performance and results from April," Vujcic said when asked by reporters about the impact of the ongoing government crisis on the economy.

Latest news

Syrian opposition rules out future role for President al-Assad

The Syrian opposition said Friday it would not accept any role for President Bashar al-Assad in the future of the war-torn country, reacting to a recent US shift saying that removing al-Assad is no longer a priority for Washington.

Russian Army integrates breakaway forces of Georgian province

Parts of the small fighting forces of the Georgian breakaway province of South Ossetia have been placed under Russian military control, Russian Defence Minister Sergei Shoigu said on Friday.

Czech Republic's Pilsner Urquell beer is now Japanese

Japanese brewing company Asahi completed its takeover of the Czech brewery Pilsner Urquell on Friday, Asahi said in a statement.

Judge approves 25-million-dollar settlement of Trump University case

A US district judge on Friday approved a 25-million-dollar settlement of lawsuits and state fraud allegations against Trump University, the US president's now-defunct business venture.

Former Thai premier Thaksin to junta on reconciliation: 'Cut me out'

Former Thai prime minister Thaksin Shinawatra on Friday announced that he is not interested in the junta-led reconciliation process, three days after the junta handed him a half-a-billion-dollar tax bill for his past business deal.

Dalic: We welcome possible deal between Agrokor and banks

The government welcomes the possibility of an agreement being concluded between the Agrokor food company and creditor banks, and the bill on vitally important companies is not a fallback plan but the result of the government's care for the overall economic and financial stability of Croatia, Deputy Prime Minister and Minister of Economy Martina Dalic told a press conference in Zagreb on Friday.

Croatia, China sign action plan for cooperation in agriculture

The Croatian and Chinese ministries of agriculture on Friday signed an action plan for cooperation in the field of agriculture for the period 2017-2018, the Croatian ministry said in a statement.

ZSE indices up, Agrokor shares in focus of investor interest

The Zagreb Stock Exchange (ZSE) indices on Friday rose by more than 1.8%, with stocks of the Agrokor food and retail concern being in the focus of investor interest again.

Berlin police defend handling of Berlin market attacker

Berlin police defended themselves on Friday against accusations that they stopped surveillance on Berlin Christmas market attacker despite knowing in June 2016 he was dangerous.

Croatia, creditors tailor emergency measures to save tottering giant

Croatia's tottering retail and food giant Agrokor reached an agreement with its creditors, putting its debts standby and allowing it to continue working during emergency restructuring, the Croatian branch of Austria's Erste Bank said Friday.

Agrokor's creditors say standstill agreement to go into force today

A standstill agreement regarding the Agrokor concern's existing financial obligations to banks will take effect on Friday, additional capital will be injected into the concern in the coming days and the concern will be actively restructured, which includes a change of its management, it was said on Friday after a meeting between Agrokor's suppliers and creditor banks.

Palestinians, UN slam Israel's new settlement plan

Palestinians, Israeli activists and the UN lambasted the government of Israeli Prime Minister Benjamin Netanyahu on Friday, a day after it gave the go-ahead for the first new West Bank settlement in a quarter of a century.

South Sudan rebels release three abducted foreign oil workers

South Sudanese rebels have released three foreign engineers they abducted in early March in the oil-rich Upper Nile region, Foreign Affairs Ministry official Mawein Makol Arik said on Friday.

Turkish opposition: Imprisoned party chief has gone on hunger strike

The head of Turkey's pro-Kurdish opposition party has launched a hunger strike from prison.

European leagues threaten Champions League schedule clashes

The European Professional Football Leagues (EPFL) on Friday threatened schedule clashes on Champions League matchdays in an ongoing dispute with the governing body UEFA.

Danish court revokes citizenship of IS volunteer

A Danish appellate court on Friday stripped a man of his Danish citizenship for volunteering to fight for the extremist Islamic State in Syria.

Banks and Agrokor agree on key elements of standstill agreement

Member banks of the coordinating committee of financial creditors and representatives of the Agrokor food company have in principle agreed on key elements of a standstill agreement, which is expected to be signed later today, announcing changes in the company's management team, Erste Bank said in a statement on Friday afternoon.

Syrian man on trial in Sweden; mosque attack labelled terrorism

A Syrian man went on trial Friday in the southern Swedish city of Malmo, charged with terrorism and arson after an attack last year on a building used as an assembly hall by Shiite Muslims.