The decline, for the seventh consecutive quarter, was lower than in Q1, when GDP slid 1.5% on the year.

Commenting on Deputy Prime Minister Branko Grcic's statement that the decline was expected, the HDZ's coordinator for the economy and finance wondered how that was possible, when all government documents said they expected a GDP increase of 0.7%.

"For the government's expectations to come true, GDP should grow more than two per cent by the end of the year, which is impossible," said Milosevic.

He said the HDZ had been warning about the government's poor economic policy for a year. He said it had been reduced to the tax policy and the results were devastating.

He said the tax repression should be replaced by tax relief, but not only in the tourism and hospitality sectors, and that the past six months saw no talks of investments, only the cheap sale of "the state's silver."

Milosevic urged the government to publish a study on the profitability of motorway leasing for which he said the taxpayers had paid dozens of millions of kuna.

He said the government had not carried out even one structural reform in the last two years, notably in state administration and public companies.

The secretary of the HDZ Economy Committee, Goran Soldo, said the fact that GDP had declined for the seventh consecutive quarter was the result of the "poor and wrong direction of the government's economic policy."

"Without any development strategy, the government has destroyed all economic activity, causing a lot of problems to the budget too," he said, adding that because of a lack of investments, state finances were about to crash.