Text: Žikica Milošević
If you think that this information is just a typical spin of the Croatian government, which is something that has been rampant lately everywhere, than you are sorely mistaken. It is the eminent Bloomberg that has ranked the Croatian economy based on the global risk index.
The global risk index in economy, based on four criteria, shows Croatia in favourable light. According to three out of four criteria, Croatia is deemed as having one of the least risky economies in the world. Just to reiterate, this index is generated by the renowned company Bloomberg. The index measures the share that international reserves of the central bank, excluding state’s gold reserves, have in the country’s GDP, the share of the unemployed in the society, the inflation rate, and the fluctuation rate of the local exchange rate. So, how does Croatia fare in all criteria? Well, Croatia does have a high share of international reserves of 26% which puts it in the top nine least risky countries.
The expectations regarding inflation are low, and because the forecasted inflation rate is only 1.2%, Croatia ranks 14th in the world. The poor results were recorded only in the unemployment segment according to which Croatia is considered a risky country. As reported by the International Labour Organisation, this year Croatia should have the unemployment rate of 11.7%, placing the country at 75th place among the 82 countries in which results were analysed and compared which is a dreadful result. This is not surprising considering the epic braindrain of both qualified and unqualified workforce in Croatia. Just like in Serbia and Bosnia and Herzegovina, it is usually the workers who are difficult to replace, like doctors and other medical workers (anesthesiologists), as well as not so prominent but necessary worker profiles like tram and bus drivers, that have been leaving the country in droves. We often do not notice the lack of the latter worker profiles unless it starts jeopardising road safety in the region.
The criteria that was not applied to Croatia was the fluctuation in the exchange rate of the Croatian currency – the kuna – which is pretty stable anyway. Overall, Croatia scored well in the global risk index analysis, but this does not mean that the country is now ‘high and dry’, so to speak. Although Croatia has a solid standing among the 27+1 EU countries (and slowly making its way to the group of privileged countries, adapting to it as Great Britain is exiting), Croatia’s credit rating is still not at the A level. Moody’s assigned a Ba2 rating to the Croatian state bonds with a good outlook which does give reason for optimism. By doing this, Moody’s is signalling to investors that Croatian state bonds are considered a speculative buy, and that, as such, they should not be considered an investment.
Considering the divergent aspirations of the Croatian economy (as in other countries of the region, the emigration is high, but the tourism revenue is incredible and growing), we can expect a “bumpy ride” but with relatively stable projections, even if that means „filling the gaps with surplus“.
DEINDUSTRIALISATION VS. REINDUSTRIALISATION
Deindustrialisation is present in Serbia just like anywhere in the East or in Europe, as well as in the so-called Rust Belt in the US. However, if we kiss the illusions goodbye and stop lamenting about the deindustrialisation of our country, there are some encouraging figures to consider. After the fall of real socialism in the 1990s, Croatian economy started transitioning towards open market economy. Today, this is one of the strongest economies in Southeastern Europe, and judging by its GDP, it has even surpassed some of the other EU members.
The good segments of the Croatian economy are definitely the agriculture (still solid, even if Slavonia is in the worst position out of all Croatian regions), the food industry, the textile industry, the wood processing industry, the metal industry, the chemical industry, the oil industry, the electrical industry, the construction industry, and a “great trinity of the Croatian economy” – shipbuilding, maritime and tourism. If the country decides, as they all do, to opt for reindustrialisation, IT clusters will become the new hope for Croatian economy just like in Serbia, Belarus, Romania or Ukraine, as will green agriculture, green energy, and, of course, an infinitely developing tourism industry that shows no signs of slowing down. One of my friends says that Dalmatia is one of the top 3 regions in the world in terms of ideal tourist destinations, and it is really not that difficult to use such a potential today, especially as younger generations become smarter and more flexible in the use of marketing technologies.