Croatia needs to accelerate economic reforms to catch up with its more developed EU peers, central bank governor Boris Vujcic said on Thursday, pointing out that it remained harder to do business there than elsewhere in central and eastern Europe.
Analysts and the business community have for years said the government must do more to make public administration and the judiciary more efficient and the regulatory framework more stable to improve the business environment.
“A short-term picture of the Croatian economy can look positive. However, in the longer term Croatia’s potential growth prospects are behind growth prospects of the comparable countries in central and eastern Europe,” Vujcic told an economic conference in the resort of Opatija.
He said the contribution of labor and capital to the country’s growth prospects had fallen, with investment levels low and demographic trends unfavorable. Many people have left to work elsewhere in the European Union, which the country joined in 2013.
Croatia’s government and central bank are forecasting moderate economic growth of 2.5 percent this year, after a 2.6 percent expansion in 2018.
Vujcic said consumer spending may continue to be the main driver of growth.
Croatia wants to adopt the euro within four or five years. But some analysts are skeptical about whether the country could benefit from that unless it makes the economy more dynamic and resilient.