DUN & BRADSTREET: CROATIA'S BUSINESS RATING DEVELOPING POSITIVELY

DUN & BRADSTREET: CROATIA'S BUSINESS RATING DEVELOPING POSITIVELY ZAGREB, Oct 8 (Hina) - Croatia's credit rating indicators are developing positively, reads the October report of one of the leading international business information and credit rating agencies, Dun & Bradstreet (D&B), released by the Zagreb-based BonLine company, D&B's representative in Croatia. Thanks to the accelerated development of the country's export sector, D&B's forecasts are optimistic and register positive developments in the country's credit rating and the unchanged investment risk mark DB5a. This mark means that there are still significant investment risks, however, the assessment of future developments in positive. DB5a is the best rating in the DB5 section which stands for high risk areas. D&B analysts have revised their expectations regarding the growth of Croatia's GDP from 2.5 to 2.8 percent this year and from 3 to 3.5 percent next year. They believe the growth of the export sector was caused by three factors: increased exports to the European Union, increased exports due to the country's formal admission to the World Trade Organisation, and incentives which followed the EU's decision on cancelling customs tariffs and quotas for 95 percent of Croatia's exports by the end of 2002. According to the report, Croatia's exports in the first seven months of this year increased by 6.7 percent (amounting to US$2.5 billion) with most important export markets being EU countries (19.4 percent or 1.6 billion dollars). At the same time, imports were stagnating and dropped by 0.2 percent compared to the same period last year, whereas trade deficits decreased by 8.2 percent (to 1.9 billion dollars). The agency expects that the strengthening of export movements will continue and Croatia's improved international relations are opening the door to foreign capital in the form of direct foreign investments. This, according to the report, will result in increased imports and cause a deficit of six percent of GDP. Croatia received the rating mark DB5a in May this year, when the mark was improved for the first time after 20 months by one level. Credit rating indicators changed from neutral to positive in the September report, which is emphasised in the latest report and bears witness to the continuation of positive trends in the country's investment risk assessment. Croatia is still ninth on a list of 24 central and east European countries in transition. (hina) rml