The World Bank, however, does not expect the continuation of a sharp decline in GDP this year and envisages that the GDP fall will range between 2.7 percent in case of the successful ongoing tourist season, and 3.5 percent in case of lower revenues from the tourist trade, the head of the World Bank Croatia office, Andras Horvai, told a news conference in Zagreb on Thursday.
Horvai presented the bank's regular economic report on 10 European Union member states from eastern Europe and on Croatia which reads that those countries "are in recession with economic activity projected to decline by around 3 percent this year, and stagnate around zero percent next year".
Therefore, the region is facing a sharp rise in unemployment from 6.8 percent in 2008 to 10.4 percent in 2010, or from 3 million to 5 million people.
"This rising unemployment could derail any nascent recovery, as it could take years to reabsorb excess labour pools," reads the report.
"Croatia has been holding up relatively well given the present global crisis. This is in part due to the Croatian financial sector, which entered the global downturn well capitalised and soundly supervised," said Horvai.
"These difficult times also present an opportunity to deepen structural reforms in order to soften and shorten the downturn and accelerate the convergence towards EU income levels after markets normalise," Hovai said.