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Fitch Raises Croatia's Outlook to Positive

World

Photo by T. Schneider / Shutterstock.com

Fitch Ratings said it has revised the outlook on Croatia's long-term foreign-currency issuer default rating (IDR) to positive from stable and affirmed the IDR at 'BBB+'.

"Croatia has recorded the second-highest cumulative growth in the EU since the pandemic shock," Fitch said in a press release late on Friday. Real GDP of the Adriatic country is 13% higher compared with the fourth quarter of pre-pandemic 2019, while income levels reached 73% of the European Union average at end-2022.

"We expect growth to average 2.7% in 2023-2025 compared with 1.1% expected for the eurozone. The economic outlook will be largely driven by domestic demand," the ratings agency said.

The inflation trajectory and slowdown in external demand are downside risks to the growth outlook, according to Fitch.

The credit rating agency expects the general government budget to post a small deficit of 0.5% of GDP, compared with 2.4% expected previously and down from a surplus of 0.4% in 2022. 

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