S&P: Croatia Downgraded Again

S&P: Croatia Downgraded Again / Picture: © Vindobona.org

Croatia´s rating remains a „BB+“. The outlook was lowered from “stable” to “negative”. According to S&P, the rating has to be revised again in case of a deterioration of the economic situation. Moreover, an increasing budget deficit or a rising foreign indebtedness would also justify another downgrade, the rating agency said.

This year, Croatia´s recession will not come to an end. 2013 is the fifth year in a row in which Croatia´s GDP is falling. Since 2008, the GDP was down by 13%. Above all, investments are going down. In the last five years, investments declined by 36%. S&P predicts a negative economic growth of 1% this year. According to the rating agency, the EU membership is an opportunity for Croatia to promote growth and to improve the competitiveness. However, S&P is in doubt whether Croatia will be able to make use of the EU funds in the period from 2014 to 2020.

Croatia´s Minister of Finance Slavko Linic underlined that Croatia´s government will accelerate the “necessary reform steps”. Above all, Linic wants to privatize publicly owned companies and promote the capital inflow. “The only remaining question is the public support. It seems that the Croats do not know the public debt level and the potential of our country.”