The Croatian economy will most likely continue its four-year recession in 2013 with the IMF forecasting a contraction of 0.2% this year. Therefore, the positive effects from the country joining the EU in mid-2013 will be lagging, considering the economic stagnation in European states and in Croatia itself.

Still, the EU membership is going to open for Croatia the doors of the EU funds, designed to go in strategic economic and development sectors. The European Commission already proposed to adjust its 2013 budget, raising the funding to Croatia to EUR 655mn, or 0.4% of the EU budget.

In a response to worsening fiscal revenue, the government issued a USD 1.5bn Eurobond in March with a 5.5% coupon. Fitch assigned it a BBB- rating – in line with the long-term sovereign one.

Consumer price inflation slowed down to 3.9% in March from 4.9% a month earlier as food prices advanced only 4.5% compared to February’s 5.2% growth. Retail sales fell by a real 3.3% on the year in February after declining 6.7% a month earlier. Industrial production shrank 4.1% on the year in February after dropping 3.4% in January.

The end-February unemployment rate climbed to 21.9% from 20.1% a year earlier as a result of the protracted recession. Moreover, the average net wages fell by a real 3.8% year on year in January after shrinking 4.6% a month earlier. Labour productivity went up 6.9% in the first two month of 2013 after dropping 1.3% in 2012.