PM: Croatia among EU countries with strongest economic growth

Average economic growth in the past three years should reach 7.6%, and Croatia is third in the EU in that regard, after Ireland and Malta, PMВ Andrej Plenković said while presenting a state-of-the-nation report in parliament on Tuesday, citing wage and employment growth and unemployment decline.

Amid constant noise coming from opposition benches, which were dissatisfied with how the session was being conducted, Plenković said that GDP per capita had increased from 62% of the EU average of seven years ago to 73%.

During that time, taxes as well as the share of public debt in GDP and the budget deficit were reduced, he said.

In 2016 public debt accounted for 80% of GDP and this year it is estimated that it will fall to 60.7%, Plenković said.

Croatia has for the first time joined 38 advanced economies according to IMF criteria, and is one of the two countries, the other one being Greece, whose credit rating during the crises caused by COVID-19 and the war in Ukraine was raised by all three most important rating agencies, and they raised it to the level right below the highest one, he said.

In terms of meeting UN sustainable development goals, Croatia ranks 12th among 193 countries, he said.

Plenković also mentioned the five rounds of tax reform, in which €1.3 billion was invested, with profit tax having been reduced from 20% to 10% for more than 90% of businesses, and VAT rates for some products as well as income tax rates having been cut.

The government’s six sets of aid measures for households and the business sector cost 7.2 billion euros, he said.

Euro introduction did not raise inflation, as evidenced by the inflation rates in central and eastern members of the EUВ where the euro is not legal tender, being higher than in Croatia, the PMВ said.

He also noted that over the past seven years the number of workers had increased by 265,000 and the employment rate from 61.4% to a record high 71.2%. At the same time, he added, the unemployment rate has dropped from 12.3% to 5.4% and is the lowest since 1989.

Plenković expects wages to grow as a result of the latest round of tax reform, in the form of contribution by local government units, either by their abolishing or reducing local surtaxes, maintaining that they have sufficient manoeuvring space for that.

The government had planned the average monthly wage to amount to €1,008 in 2024, and the median net wage has already reached that level and in August this year it amounted to €1,004, he said.

“The average wage has grown during our term by 55%, from €749 to €1,163, which is an increase of €414,” he said, adding that the minimum wage had increased by 61%, from €331 to 560.

Despite the high inflation, owing to the faster growth of wages, the purchasing power has increased by 20%, the Prime Minister claimed, noting that in the seven years of his government’s term the number of new and active small businesses had increased.

Croatia has been given €12 billion more from the EU budget than it has paid into it in the ten years of its membership, he said.

Speaking of tourism, he said that revenue from foreign arrivals in 2016 was 8.6 billion euros and in 2022 €13.1 billion.

As for agriculture, he said that self-sufficiency in food production was a goal, and that there was a plan for the consolidation of 18,000 hectares of farmland by the end of 2025.

Speaking of African swine fever, he said the state would strongly support pig farmers, with aid schemes for pig farmers so far amounting to €30 million.

Energy-wise, we want to be a hub in this part of Europe, he said, noting that there was a plan to expand the capacity of the LNG terminal on the northern Adriatic island of Krk.

Speaking of transport projects, he cited, among other things, the PeljeЕЎac Bridge project, the completion of the Vc road corridor through Slavonia and Baranja, work on completing the Zagreb-Sisak highway until Easter, and plans for a third motorway lane from Zagreb to Karlovac and on the Zagreb ring road.

Plenković  also mentioned the completion of the Istrian Y motorway and the UДЌka Tunnel, the state road D403 in Rijeka and the KriЕѕiЕЎДe-ЕЅuta Lokva road via Senj, and the continuation of work on the motorway towards Dubrovnik, as well as construction work on a ring road in Split and the signing of a contract for the Kozjak Tunnel.

The prime minister also announced в‚€6 billion worth of investments in the railway infrastructure.