Speaking about the HUP Score for 2016, HUP Director General Davor Majetic said that the results continue to indicate weak foundations and the absence of structural reforms. A score of 33 brings into question the sustainability of the current growth rate and development capacities for long-term social and economic development, he said.
Of the countries used for comparison, Hungary scored the same as in 2015 (52 points), Romania (46), Slovakia (46), Slovenia (58) and Estonia (68).
Croatia progressed in productivity and competitiveness with the score increasing by 6 points as a consequence of a GDP growth and increased exports to GDP ratio. Progress is also visible in equity offers and a recovery in loans provided to enterprises, Majetic said.
An analysis has shown several chronic weaknesses in the economy, these being the labour market, fiscal consolidation, burden on the economy, poor absorption of capital and the situation in the judiciary. Majetic considers that the labour market is the most critical aspect recording a score of just 19 points, putting Croatia at the bottom of the scale in comparison to the other countries analysed.
Majetic added that even though the state deficit had been reduced, which was perceived as a great achievement, an overall review of several fiscal indicators showed the problematic nature of Croatia's fiscal consolidation model which has prevented any greater progress.
According to Majetic, the changes made in Croatia last year were more or less symbolic and HUP urges the continuation of tax reforms, consolidation of the expenditure side of the budget, reduction of fees and levies.
With its current growth rate, Croatia is at the bottom of the scale in the European Union without any outlook of getting closer to more successful member states, HUP President Gordana Deranja said.
Forecasts indicate that if a bad-case scenario in Agrokor is avoided, the current growth rate should continue or just below. That isn't good enough. Without reforms in the judiciary, education, health and public administration, without improvement in the business environment and changes on the labour market and so one, we will not go ahead, she said.