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Croatia: Economic Recovery May Lie Ahead

  • Alexandra Poolos

A Croatian economics analyst says the results of the parliamentary elections in Croatia have already triggered signs of recovery in the depressed economy. RFE/RL's correspondent Alexandra Poolos talks to Ratko Boskovic, who says the new government will inspire confidence in foreign investors.

Zagreb, 26 January 2000 (RFE/RL) -- The Croatian economy is poised to come in from the cold.

That is the prediction of Ratko Boskovic, economics correspondent for the Zagreb daily "Jutarnji List." He says the recent parliamentary win by a six-party reformist bloc has raised the prospect of economic growth for the country. The new government is expected to be named by tomorrow (Thursday).

But Boskovic says the real turning point for Croatia was the death of its autocratic ruler, Franjo Tudjman, whose ten-year grip on power left the former Yugoslav country severely isolated. Even though Tudjman died only last month, Boskovic says, the prevailing international attitude toward Croatia has already changed. He says foreign investors are losing no time in re-entering the Croatian market.

"The attitude of foreign investors toward Croatia will deeply change. That will be the best thing in the next years. The perception of crisis will deeply change. We touched the bottom of the crisis last year, and it can't be worse these next years. I can show you some signs of recovery already. The Croatian debt has increased in value. International investors are coming back to Croatia. They are buying Croatian bonds and stock again on Croatian capital markets and money. And these are all signs of recovery." Most observers note, however, that foreign investment alone will not solve all of Croatia's economic problems. Privatizing state industries will be key. Some 70 percent of Croatia's major companies are still state-owned. That includes water, electricity, oil, and transportation. Government expenditures account for almost 60 percent of Croatia's gross domestic product, or GDP.

Other signs of a struggling economy include high unemployment (21 percent) and low salaries (mostly under $500 a month). Croatia is also deep in foreign debt, owing some $9.5 billion.

International observers have cautioned that the coalition could have difficulties pushing through privatization and cutting government spending. But Boskovic says that while jobs cannot be created overnight, he believes the new government has the will to lay down the groundwork for an economic recovery.

"No, no reason to doubt. I don't think so. I know those people. They are very energetic. They hardly wait to change things. They can make a turn very quickly and very intensively."

Boskovic says the new government will help complete Croatia's transition to a market economy.

"I think that the real transition will start now. Of course we had a transition before. We don't have socialist firms now. We have many private companies that were forbidden ten years ago. But Croats have been deeply disappointed with the pace of transition. At the beginning of the 90s, there were 70,000 or 80,000 companies registered in one year. Croats were hungry for capitalism, for private incentives, for private investing. But privatization of huge, government-owned companies practically stopped in these years."

Boskovic says the spirit of private enterprise that surged through Croatia in the early 1990s can return, and if the parliament can implement the policy it says it supports, the economy should grow within two to three years.