Fitch downgraded Croatia’s credit rating to one level below investment grade - BB+, from BBB- in late September, citing worsened fiscal outlook. It also worsened its estimate for Croatia’s economy, saying it will contract by 0.9% this year after projecting a 0.3% growth earlier. Furthermore, the rating agency has revised up its forecast for Croatia’s 2013 general government deficit to 4.7% from previous 3.9% and now expects the general government debt to peak to 66% of GDP in 2016, up from previously expected 62%.

At the same time, the IMF also downgraded its forecast on the Croatian economy, saying it will shrink rather by a real 0.6% in 2013, and by just 0.2% as earlier expected. The IMF thus forecasts Croatia will be the only country in Central and Eastern Europe, whose economy will shrink in 2013.However, the Fund kept its forecast for next year's GDP growth unchanged at 1.5%.

Croatia’s annual consumer price inflation again eased to 1.1% in September from 1.9% in August and 2.3% in July. The industrial production decline also slowed down – to 3.5% in August from 4.1% year on year in July. Retail sales climbed up by a real 2.6% on the year in August after edging up 0.4% in July.

The jobless rate dropped to its eleven-month lowest of 18.4% in August from 18.5% in July thanks to seasonal hiring. It was still above the 17.7% one registered in August 2012.

The country's foreign trade deficit rose an annual 2.7% in January to July after widening 6.3% in the first half of the year. Latest available data for the current account balance showed its gap shrank 16% year on year in the first six months of 2013 thanks to higher tourism revenue. The current account gap accounted for 3.6% of GDP in January to June vs 4.5% of GDP in January to June 2012.