ZAGREB: Croatia's central bank Monday increased its growth forecast for this year to 5.9% from 5.0% projected last December.

"We expect a stronger recovery of domestic demand this year," the central bank said in a statement.

It said some risks remained related to the results of the summer tourism season, which is seen bringing higher income than was the case last year. The worst case scenario envisages growth of just 2.8%, the bank said.

Last year Croatia's economy contracted 8.4%. due to the COVID-19 pandemic.

The central bank also said it expected the average inflation this year accelerating to 1.7%, up from its earlier forecast of 1.0%, due to higher prices for petrol and other energy commodities. Last year the average inflation amounted to 0.1%.