- Objavljeno: 11.02.2013.
Potpredsjednik Grčić za Thomson Reuters
Croatia's recovery hopes fade in EU entry year
ZAGREB, Feb 11 (Reuters) - Croatia's long-anticipated entry to the European Union in July won't deliver the economic recovery that the government had hoped for, Deputy Prime Minister Branko Grčić told Reuters on Monday.
The Social Democrat-led government had forecast growth of 1.8 percent for this year, but "any growth we achieve beyond the mere statistical error would be welcome, signalling a reversal of negative trends of the past four years," Grčić said in an interview.
He said the government would still push on with spending cuts - needed partly to compensate for the costs of EU entry - to hold down the country's borrowing costs. Two credit-rating agencies have cut Croatia to junk this year, citing widening deficits and meagre economic growth prospects.
Analysts expect gross domestic product to grow up to 0.8 percent at best. Some see a fifth straight recession year.
Croatia's public debt has risen from some 35 percent of GDP in early 2009 to close to 60 percent.
"We will make an effort to save an additional one to two billion kuna. Our problem was that this year our costs were some 5.7 billion kuna ($1 billion) higher than in 2012 and we simply could not avoid it," Grčić said.
The government is also trying to simplify regulations and labour laws to attract private investment, notably in developing its liquefied natural gas resources and increasing electricity generation.
However, the weak EU economy and falling household consumption and industrial output at home have added to scepticism about investment prospects.
"We're aware of all our weaknesses... What really matters now is what we're doing at home. Potential investors' expectations will be based on that," Grčić said, acknowledging the pace of change was slow.
"Our public administration is rigid and we must make it more efficient, we must make the labour market more flexible, work on sustainability of the pension system, revise the system of social benefits and rationalise the health sector. We must also remove the barriers for investors," Grčić said.
Opposition to such changes have been widespread.
Ivica Todorić, whose food and retail company Agrokor is one of the biggest in the region, said in a rare public appearance last week that Croats were "simply against everything".
"Whatever law the government passes soon runs into obstacles. People are against ... local and foreign investors, against energy investments. This government is determined to enforce reforms and we should all be more responsible," he said. ($1 = 5.6608 Croatian kunas)
(Reporting by Igor Ilić; editing by Zoran Radosavljević and Ruth Pitchford)
ZAGREB, Feb 11 (Reuters) - Croatia's long-anticipated entry to the European Union in July won't deliver the economic recovery that the government had hoped for, Deputy Prime Minister Branko Grčić told Reuters on Monday.
The Social Democrat-led government had forecast growth of 1.8 percent for this year, but "any growth we achieve beyond the mere statistical error would be welcome, signalling a reversal of negative trends of the past four years," Grčić said in an interview.
He said the government would still push on with spending cuts - needed partly to compensate for the costs of EU entry - to hold down the country's borrowing costs. Two credit-rating agencies have cut Croatia to junk this year, citing widening deficits and meagre economic growth prospects.
Analysts expect gross domestic product to grow up to 0.8 percent at best. Some see a fifth straight recession year.
Croatia's public debt has risen from some 35 percent of GDP in early 2009 to close to 60 percent.
"We will make an effort to save an additional one to two billion kuna. Our problem was that this year our costs were some 5.7 billion kuna ($1 billion) higher than in 2012 and we simply could not avoid it," Grčić said.
The government is also trying to simplify regulations and labour laws to attract private investment, notably in developing its liquefied natural gas resources and increasing electricity generation.
However, the weak EU economy and falling household consumption and industrial output at home have added to scepticism about investment prospects.
"We're aware of all our weaknesses... What really matters now is what we're doing at home. Potential investors' expectations will be based on that," Grčić said, acknowledging the pace of change was slow.
"Our public administration is rigid and we must make it more efficient, we must make the labour market more flexible, work on sustainability of the pension system, revise the system of social benefits and rationalise the health sector. We must also remove the barriers for investors," Grčić said.
Opposition to such changes have been widespread.
Ivica Todorić, whose food and retail company Agrokor is one of the biggest in the region, said in a rare public appearance last week that Croats were "simply against everything".
"Whatever law the government passes soon runs into obstacles. People are against ... local and foreign investors, against energy investments. This government is determined to enforce reforms and we should all be more responsible," he said. ($1 = 5.6608 Croatian kunas)
(Reporting by Igor Ilić; editing by Zoran Radosavljević and Ruth Pitchford)