World Bank revises up growth forecast for Croatia to 2.7% in 2023

The World Bank said on Thursday it expects steady growth for the Croatian economy, revising up its growth forecast for this year to 2.7% “despite significant headwinds”.

“This increase is mainly due to a recovery of personal consumption and a strong growth of tourism, but also investment activity supported by EU funds. Despite significant headwinds, Croatia’s growth is expected to stay close to 3% over the forecast period (2.5% in 2024 and 3% in 2025), as inflation is expected to moderate and external outlook to improve. Steady growth and a declining need for fiscal support are expected to keep the fiscal deficit contained and public debt on a declining path, which is expected to fall below 60% of GDP by the end of 2025,” says the World Bank’s Economic Update for the emerging market and developing economies of the Europe and Central Asia region.

In early June, the World Bank projected the growth rate for the Croatian economy for this year at 1.9%.

Inflation is forecast to reach 8.4% in 2023 before slowing down to 3.9% ion 2024 and 2.3% in 2025.

Growth in the Western Balkans to slow down

Growth in the Western Balkans is projected to slow to 2.5% this year, with a projected pick up to 3.3% for 2024 and 2025, reflecting moderation of inflation pressures, a gradual recovery of exports, and increasing public spending on donor-backed infrastructure projects.

In 2023, consumption remained resilient in Albania, Kosovo and Montenegro, buoyed by the recovery in tourism, but weakened in Bosnia and Herzegovina, North Macedonia, and Serbia due to weaker export demand from the EU.