Economic growth and stagnant external debt

Published: 10/10/2007

At its session today, the Croatian National Bank Council reviewed recent economic and monetary developments, adopted a monetary policy projection for the last quarter of the year and enacted several decisions falling within its area of responsibility.
The available indicators for the third quarter suggest that economy continued to expand, with this year's growth rate currently estimated at about 6 percent. The main impetus to growth has come from personal consumption, while the contribution of investment consumption, the key driver of growth in 2006, has been somewhat smaller. Net foreign demand has contributed negatively to growth again this year, which has been reflected in a high balance of payments deficit.
Monetary developments have been in line with the projections and so have trends in bank placements. External debt stood at EUR 30.7bn at the end of September, holding steady from the end of June. Bank external debt declined by EUR 1.4bn in that period, government debt drifted slightly higher, while enterprise debt increased, but at a lower rate each month. All this is an indication that the external debt to GDP ratio is unlikely to increase significantly this year.
This proves the success of the central bank measures implemented with the main objective of reducing the country's external vulnerability. It has also been proved that the allegedly overly restrictive monetary measures have not adversely affected domestic economic activity and that bank profitability has remained high despite the implemented limitations.
The CNB Council granted approvals to Cembra Beteiligungs GmbH and Raiffeisen International Beteiligungs GmbH, Vienna for the indirect acquisition of a shareholding exceeding 50 percent in Raiffeisenbank Austria d.d., Zagreb, resulting from the restructuring within the banking group.
Also at this session, the CNB Council endorsed the proposals of several banks' supervisory boards for the appointment of management board members: Ivan Dujmović was thus appointed Member of the Management Board in Banco Popolare Croatia d.d., Zagreb, MarcoCapellini in Privredna banka d.d. Zagreb and Marko Remenar in Zagrebačka banka d.d. Zagreb.