As the election is over in Croatia and Ivo Josipovic has been sworn in as the new president, economic topics or rather the question of how to fight recession returned to the foreground. The 5.7% fall in economic activity in Q3 2009 warned that economic recovery will not be achieved without a more active economic policy. Therefore, the Government of the Republic of Croatia set out to halt the negative trend in domestic production and employment by adopting a series of overdue emergency measures aimed at supporting companies that offer competitive products or services and enabling better realisation and protection of employment. The Governor of the CNB announced a more active role of the monetary policy in the fight against recession, with the CNB being prepared to release additional liquidity by speeding up to process of adjusting bank reserve requirements with ECB target rates and thus help to restore corporate lending at lower capital costs.
Although desirable, these measures will not suffice without a change in fiscal policy, writes Raiffeisenbank in this 20 page analysis of the Croatian economy. Click here to download the report.