Page 37 - SE Outlook Regions 2022

2.4.2 External environment

Croatia posted a current account deficit in 2020 when the economy was
negatively affected by the coronavirus pandemic. Although the
projections are that the country could reduce the deficit or turn to a
surplus, central bank data for the second quarter of 2021 showed a
deficit of 0.2% of GDP.

The central bank has commented that the balance in the current and
capital account worsened slightly in the second quarter compared to
the same period a year earlier, due to an increase of foreign trade
deficit and a deterioration of the primary account balance.

According to the International Monetary Fund (IMF), Croatia’s current
account deficit is forecast to decrease to 0.1% of GDP in 2021 from
0.4% in 2020. It should expand to 0.8% of GDP in 2022, with the
current account seen turning to surplus in 2026.

The World Bank has projected that the country will turn to a current
account surplus equal to 1.6% of GDP in 2021. The current account
surplus should reach 2% of GDP in 2022 and rise to 2.4% of GDP in
2023.

Croatia’s foreign trade deficit amounted to HRK47bn (€6.25bn) in the
first nine months of 2021, up from HRK42.5bn in January-September
2020, according to statistics office data.

The trade deficit expanded in the first nine months of 2021 as exports
recovered faster than imports after the start of the coronavirus
pandemic.

2.4.2 Inflation and monetary policy

Croatia’s consumer prices were largely affected by rising energy prices
in 2021, as well as by higher private consumption. The World Bank has
projected the consumer price inflation at 2.3% in 2021, up from 0.2% in

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