According to the institute's latest Croatian Economic Outlook Quarterly publication, an inflation rate is likely to reach 3.5 percent owing to trends in oil prices on the world market and a rise in prices of state-run utilities.
EIZ experts expect the continuation of positive trends in the labour market. However, growing inflation pressure may undermine the real effects of the rise in salaries.
They also predict that the current account deficit will remain at a a level above six percent of GDP.
Gradual deceleration is likely to be recorded this year in the approval of bank loans as a result of measures which the Croatian National Bank (HNB) has taken to curb the credit expansion which helped the worrisome generating of the country's foreign debt.
According to the publication, a 4.3 percent rise of GDP in 2005 exceeded all the expectations, reflecting positive trends in many sectors, including the manufacturing industry, construction, trade and catering.
These results can partly be ascribed to a strong rise in investments, with an investment rise of 9.9 percent in the last quarter of 2005.
Investments are projected to rise seven percent in 2006.