April 30, 2020 / 11:21 AM / a month ago

UPDATE 1-Croatia PM expects coronavirus to shrink economy 9.4% in 2020

(Adds details)

ZAGREB, April 30 (Reuters) - Croatia expects its economy to shrink by 9.4% this year because of the impact of the novel coronavirus, Prime Minister Andrej Plenkovic told a cabinet session on Thursday.

Croatia at the end of last year had projected growth of 2.5% in 2020. The economy expanded by 2.9% in 2019.

“In the last three years we’ve run a budget surplus. Now we face a strong economic contraction due to the coronavirus pandemic, so from now on we will focus on the economic recovery,” Plenkovic said.

Finance Minister Zdravko Maric told Thursday’s session he expected economic growth of 6.1% for 2021.

He also said that this year the government expected annual average deflation of 0.3%.

“The budget deficit in 2020 is now planned at 6.8% of gross domestic product, or 24.8 billion kuna ($3.56 billion). The public debt is seen rising to 86.7% of GDP,” he said. At the end of last year the public debt amounted to 73.2% of GDP.

The deficit will be financed through borrowing at home and abroad.

$1 = 6.9636 kuna Reporting by Igor Ilic; editing by Barbara Lewis

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