Current account deficit lower than expected

Published: 4/4/2001

At the meeting held on Wednesday, April 4 2001, the Council of the Croatian National Bank, chaired by governor dr. Željko Rohatinski, reviewed recent monetary and economic developments, appointed the general manager of the Institute for Domestic Payments and approved a number of nominations for chairmen and members of banks' and savings banks' management boards.

According to available indicators, real GDP grew by 3.7 percent in 2000, in line with expectations. Current account deficit for 2000 is considerably under the expected 5 percent of the GDP: the latest estimates, based on revised international trade data of the State Statistical Bureau, show that the deficit is lower than 3 percent. Merchandise trade deficit amounted to USD 3.5 billion last year, which is approximately the amount observed in 1999. However, since the surplus on services account increased by about 40 percent, primarily due to improved tourism receipts, current account deficit for 2000 decreased to only one third of the 1999 deficit, that is, from USD 1.52 billion to USD 531 million.

In the first few months of this year, monetary developments were marked by the continuing growth of bank lending to the private sector, so that - according to the most recent estimates - their growth in the first quarter of the year will probably amount to more than 4 percent. Although household credit lines still grow much faster, recent indicators of the corporate loans growth are quite encouraging. This is a significant change after the stagnation of corporate loans observed during several previous years. Today, the level of domestic currency corporate loans and household credit lines is approximately the same, while two years ago the share of corporate loans amounted to 60 percent - four years ago even 70 percent - of total lending to the private sector. Deposits kept with banks increased as well: in February, foreign currency deposits reached the amount of USD 49.6 billion, and kuna deposits HRK 9.1 billion.

After a slight increase in February, resulting from the introduction of the National Clearing System, in March interest rates on the money market decreased again to below 4 percent. Downward tendency remains a feature of interest rates on CNB bills as well. Further, long-term downward tendency was observed with average interest rates of commercial banks. The tendency is especially evident with short-term corporate loans, where the average interest rate almost halved in the past year and a half. Interest rates on long-term corporate loans, largely with a currency clause, are decreasing more slowly, but persistently.

At the Wednesday meeting, the Council of the Croatian National Bank approved the nominations of Mr. Milenko Vidulin for chairman of the management board of Istarska banka d.d. Pula and Ms. Merima Ibrahimović for member of the management board of the same bank. Also, the Council agreed with the nominations of Mr. Gordan Miler for member of the management board of Međimurska banka d.d. Čakovec and Ms. Željka Črnko for member of the management board of Štedionica Dora d.d. Zagreb. Mr. Đuro Popijač was appointed general manager of the Institute for Domestic Payments - term of office of the previous general manager Mr. Dinko Zidarević expired on April 3.

In addition, the Council of the Croatian National Bank gave its approval to Raiffeisen Bausparkasse G.m.b.H. Vienna, for acquiring up to 100 percent of voting shares in Raiffeisen stambena štedionica d.d. Zagreb.