This year will be very difficult for the Croatian economy, as gross domestic product might drop 0.7 per cent, while a slow and unstable recovery is expected in 2011, with a 2.2 per cent GDP growth, the Zagreb Institute of Economics says in its latest Croatian Economic Outlook Quarterly.
Employment may be expected to continue declining this year by some 50,000 jobs, while unemployment growth is expected to stop during 2011.
Economic downturn is still present, although it is considerably less intense than before, which indicates that the crisis is reaching the bottom and that recovery could start in the second half od the year.
The economic environment is still full of uncertainties which could considerably affect projected trends, such as the uncertain steadiness of the global economy's recovery, the effects of the government's Economic Recovery Programme or progress in moving closer to European Union membership.
The latest data on the Croatian economy point to a mildly positive trend in industrial output, a stagnation in retail trade, and stronger negative trends in construction.
With such mixed signals, the institute's forecasts point to the possibility of a mild economic recovery in the second half of the year, although 2010 as a whole will be difficult for the economy, with GDP expected to decline 0.7 per cent.
Gradual recovery is expected in 2011 with a 2.2 per cent growth. The institute says, however, that recovery will be unstable, with the possibility of alternate growth and decline of activity from quarter to quarter.
Despite pressure from energy prices, inflation could remain relatively low this year at 1.6 per cent, while 2011 might bring a mild acceleration to three per cent, primarily due to stronger domestic demand.
