Croatia's growth in the coming years is likely to be slower than the government hopes for, while fiscal consolidation may also lag behind government projection, one of the country's leading economic think tanks, said on Wednesday.
The Zagreb Economic Institute, which is partly funded by the government, said in its quarterly forecast that growth next year was seen at 2.9 percent, while the budget gap would fall to 1.9 percent of gross domestic product, down from 2.2 percent seen this year.
The government hopes for a growth of 3.2 percent in 2017 from 2.7 percent expected this year, while it sees general budget gap next year at 1.6 percent of GDP, slightly lower than this year's target of 1.7 percent. In 2018 the institute sees growth at 2.6 percent against the government's 3.2 percent.
"We think that Croatia's fiscal consolidation will continue. However, the structural deficit of the budget has not yet been in line with what the European Union has recommended," the institute said in a statement. The EU wants Croatia to pursue reforms that would cut the public debt from the current level of some 85 percent of GDP and to accelerate growth. Those reforms should include reshuffling of the health and pension sectors to curb losses and making the public administration cheaper and more efficient for the benefit of the budgetary performance and business climate.
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