Croatian central bank revises down 2018 growth projection

ZAGREB, Dec. 20 (Xinhua) -- The Croatian National Bank (HNB, central bank) expects the economy to grow by 3.1 percent in 2017, while next year it predicts a slowdown to 2.9 percent, Croatian news agency HINA reported on Wednesday.

The new prediction for this year is a slight drop from the last HNB estimation that the economy would grow by 3.3 percent in 2017. The bank is predicting a slower growth in personal consumption in 2018, which will lead to the slower growth of 2.9 percent.

In 2018, inflation is expected to pick up, so prices are likely to rise 1.6 percent, while this year's inflation will be 1.2 percent. According to HNB, unemployment will fall next year, from 12.4 to 11.3 percent.

This year's economic growth is largely driven by booming tourism and personal spending, the most significant component of the gross domestic product (GDP). Tourism amounts to almost 20 percent of Croatia's GDP.

An EU member since 2013, Croatia returned to growth in 2015 after a six-year recession. Since then, the economy has grown, but the country is still facing challenges such as a low employment rate, unfavorable demographic trends, debt, and lack of foreign investments.

Early this year, a debt crisis hit Agrokor, the biggest private company in the country and a major employer, but the impact has been limited, according to the International Monetary Fund who in October, projected 2.9 percent growth this year. Enditem