Post by MiG on Mar 26, 2010 15:33:45 GMT -5
Croatian 2009 GDP Shrank 5.8%, Most Since Balkan Wars
By Boris Cerni
March 26 (Bloomberg) -- Croatia’s economy last year contracted the most since the Balkan wars in the 1990s as investments and consumption slumped.
Gross domestic product dropped an annual 5.8 percent and compares with a 2.4 percent gain in 2008 and a record advance of 5.5 percent in 2007, the statistics office in Zagreb said on its Web site today, confirming a flash estimate first published on Feb. 26. The Drzavni Zavod za Statistiku also said GDP shrank an annual 4.5 percent in the last three months of 2009.
“A plunge in personal consumption and capital expenditure have marked the economic drop and I expect GDP to continue shrinking this year as both categories will take time to recover,” Zdeslav Santic, chief economist at Splitska Banka d.d., a unit of Societe Generale said in a phone interview before the report. “The economy will probably start expanding only in 2011 and we will also see the local currency’s appreciation in real terms because of expected capital inflows ahead of joining the EU as well as on the expected rise in inflation.”
Tax Increase
The administration of Prime Minister Jadranka Kosor introduced higher taxes last year to prop up the budget and avoid joining Serbia and Bosnia-Herzegovia in asking the International Monetary Fund for a bailout. The economy depends on consumption, investments and exports for expansion and is set to grow an annual 0.5 percent this year, according to the government.
Santic expects a contraction this year of 1.4 percent. “We have to take into account that a fifth of all trade is with the Balkan region which struggled during the recession,” he said.
The yield on Croatia’s 500 million-euro bonds maturing in 2012 dropped 6 basis points to 4.639 percent, according to Bloomberg data. A basis point is a hundredth of a percentage point. The currency kuna gained versus the euro and was trading at 7.2634 at 1:48 p.m. in Zagreb from the 7.2663 close yesterday.
Croatia is the next former Yugoslav republic in line to join the European Union after Slovenia. It aims to wrap up entry talks this year and become a member in 2012 after it overhauls the judiciary and the shipping industry and roots out corruption.
--Editors: Douglas Lytle, Alan Crosby
To contact the reporter on this story: Boris Cerni in Ljubljana, Slovenia, at bcerni@bloomberg.net
To contact the editor responsible for this story: Hellmuth Tromm at htromm@bloomberg.net
By Boris Cerni
March 26 (Bloomberg) -- Croatia’s economy last year contracted the most since the Balkan wars in the 1990s as investments and consumption slumped.
Gross domestic product dropped an annual 5.8 percent and compares with a 2.4 percent gain in 2008 and a record advance of 5.5 percent in 2007, the statistics office in Zagreb said on its Web site today, confirming a flash estimate first published on Feb. 26. The Drzavni Zavod za Statistiku also said GDP shrank an annual 4.5 percent in the last three months of 2009.
“A plunge in personal consumption and capital expenditure have marked the economic drop and I expect GDP to continue shrinking this year as both categories will take time to recover,” Zdeslav Santic, chief economist at Splitska Banka d.d., a unit of Societe Generale said in a phone interview before the report. “The economy will probably start expanding only in 2011 and we will also see the local currency’s appreciation in real terms because of expected capital inflows ahead of joining the EU as well as on the expected rise in inflation.”
Tax Increase
The administration of Prime Minister Jadranka Kosor introduced higher taxes last year to prop up the budget and avoid joining Serbia and Bosnia-Herzegovia in asking the International Monetary Fund for a bailout. The economy depends on consumption, investments and exports for expansion and is set to grow an annual 0.5 percent this year, according to the government.
Santic expects a contraction this year of 1.4 percent. “We have to take into account that a fifth of all trade is with the Balkan region which struggled during the recession,” he said.
The yield on Croatia’s 500 million-euro bonds maturing in 2012 dropped 6 basis points to 4.639 percent, according to Bloomberg data. A basis point is a hundredth of a percentage point. The currency kuna gained versus the euro and was trading at 7.2634 at 1:48 p.m. in Zagreb from the 7.2663 close yesterday.
Croatia is the next former Yugoslav republic in line to join the European Union after Slovenia. It aims to wrap up entry talks this year and become a member in 2012 after it overhauls the judiciary and the shipping industry and roots out corruption.
--Editors: Douglas Lytle, Alan Crosby
To contact the reporter on this story: Boris Cerni in Ljubljana, Slovenia, at bcerni@bloomberg.net
To contact the editor responsible for this story: Hellmuth Tromm at htromm@bloomberg.net
Source: www.businessweek.com/news/2010-03-26/croatian-2009-gdp-shrank-5-8-most-since-balkan-wars-update2-.html