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On average, global GDP will fall by three percent, with only a few countries registering growth, such as India and China, but its growth will not be the same as it used to be, but much less: between 1 and 2 percent.
The projections for Europe are worse than the world average. GDP in European countries, inside and outside the European Union, will fall by an average of 6.7 percent. But worse than this catastrophic data is that of Croatia. According to IMF estimates, Croatia’s GDP will fall as much as 9 percent, worse than Italy’s with a 9.1 percent drop and Greece’s with a 10 percent drop. At the same time, the IMF forecasts a 3 percent decline in the Serbian economy.
“That is the best case. It can be much, much worse,” economic analyst Damir Novotni told the Index.
The Croatian economy is highly dependent on tourism and related industries, so the blow will be exceptional. Countries that are less dependent on the free movement of people and more dependent on the movement and production of goods will experience a smaller decline, although no one in Europe will remain intact.
“I heard yesterday from a leading German epidemiologist who recommended that his fellow citizens not travel this summer. Perhaps, for example, the Slovenes who are closest to us will be bravest. Tourism and related industries account for a quarter of the economic activity of Croatia, and it will be even better if we do ten percent of what we had last year, “Novotni said.
Neighboring Montenegro will experience the same decline as Croatia, which, like Croatia, depends on tourism. Slightly smaller hit Slovenia with an 8 percent drop.
For the Croats, the fall of Austria and Germany is of particular concern for two reasons. Both countries are projected to be less than 7 percent of GDP. The first cause for concern is that, apart from the pandemic, the Germans and Austrians will travel less and not spend money, which will consequently endanger Croatia.
The second reason is that our citizens will lose their jobs in those countries where they traditionally go to work and perhaps begin to return to Croatia. As a result, the amount of foreign currency remittances to Croatia, upon which large numbers of citizens depend, will also decrease.
“It may seem paradoxical, but I am supporting an even bigger drop. After the big dips, there is a relatively quick and abrupt recovery. Long-term gradual dips are the worst for the economy,” said Novotni, who does not believe that a 9 percent drop is a disaster for Croatia. .
“It would mean that we would experience a crisis like ten years ago, but this time with a stronger economy. We can recover from a 9 percent drop in one or two years if the government does not make the same mistakes that were made during the past crisis and You shouldn’t raise taxes yet as they did in past crises. I hope you have learned something, “said Novotny, who predicts overall economic activity could drop as much as 15 percent this year.
“If we were already in the eurozone, we could count on the money from the extreme shock funds, that is the amount of money that will come to us.”
Fortunately, the CNB has responded well, albeit in a non-conservative manner, by increasing banks’ liquidity and there is a large amount of foreign exchange reserves. it can reduce bank obligations from 17 to 10 percent, which is a common average, and that could have a big impact on the economy, “Novotni concluded.
Kurir.rs/Index.hr
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