Zagreb - The parliament will discuss on Thursday reports from the Croatian National Bank (HNB) on the financial situation, the degree of price stability, and the implementation of monetary policy for the second half of 2023 and the first half of 2024.
This report for the second half of 2023 highlights that the year was marked by Croatia's entry into the euro area and the Schengen area, continued relatively strong economic growth despite weak foreign demand, and a gradual decrease in inflation.
Additionally, in September 2023, the strongest cycle of monetary tightening since the introduction of the euro as a currency ended.
The increase in the key interest rates of the European Central Bank (ECB) spilled over into money market interest rates, which raised borrowing costs for businesses and households. However, despite these circumstances, the Croatian economy continued to grow noticeably faster than the average of the euro area countries.
The report for the first half of 2024 notes that after the strongest monetary tightening since the introduction of the euro, in mid-2024, the Governing Council of the ECB began easing the restrictiveness of financial conditions by lowering key interest rates in response to a significant weakening of inflationary pressures.
As in the euro area, inflation in Croatia slowed the most for industrial goods, while inflation in services remained high due to strong demand and greater sensitivity of service prices to wage increases in the sector, particularly in hospitality and other tourism-related activities.
At the same time, the cost of borrowing for households and businesses continued to decrease.
Also, during the first half of 2024, Croatia's economy continued to stand out with one of the highest economic growth rates among the euro area member states. In this period, personal consumption, supported by a strong labour market and growth in real incomes, made a key contribution to economic growth.