HNB governor Boris Vujcic said on Wednesday that positive expectations were based on statistical figures which show that all components of GDP were slowly recovering, adding that the economic growth in 2016 is set at 0.9%.
Retail trade has been continuously growing for the past three quarters, personal consumption has mildly recovered, as have investments, Vujcic said adding that the construction industry was also expected to grow. Exports are also growing at rates higher than expected and all this is slowly starting to reflect on trends in the labour marker, Vujcic said presenting the HNB economic projection to the press.
The only important component expected to record a negative performance this and next year is public spending, which is the result of a fiscal consolidation mostly determined by the Excessive Deficit Procedure.
The central bank expects the inflation rate this year to be positive and amount to approximately 1%, after a negative rate of 0.5% last year.
Vujcic said the monetary police this year would remain the same, expansionary with keeping all interest rates at historically low levels, high liquidity and maintaining the policy of a stable exchange rate for the national currency against the euro.
The central bank does not expect an increase of household loans, but a small increase is expected in corporate loans. The government said a bigger increase required a higher economic growth rates.
Vujcic also said that the current quality of the Croatian banks' loan portfolio was stable, that a share of non-performing loans was stagnating and that the profitability of the banking system was also stable.
He underscored that the only possible significant negative risk in realising this year's projections was a possible risk premium growth, following recent events in Greece, namely a possible escalation of the financial crisis in that country. He however, said Croatia should not feel direct repercussions from the Greek crisis, given that it has almost no trade relations with Greece and the two countries' banking systems are not interconnected.