Due to an improved situation in the budget and economic recovery, Standard & Poor’s (S&P) raised its sovereign credit ratings for Croatia to ‘BBB-/A-3’ from ‘BB+/B’. This puts the country’s rating back into the investment category after six years. In a statement, S&P said that “the upgrade reflects Croatia’s improving fiscal metrics, underpinned by its recent economic recovery thanks to tax-rich domestic demand, but also fiscal consolidation measures implemented by the authorities. Risks to GDP performance, public finance, and financial stability emanating from the bankruptcy of Croatia’s largest food retailer Agrokor have abated. We also view the likelihood of fiscal slippages–from the payment of state guarantees against Uljanik shipyard’s debt liabilities–as reduced.” While torusim remains the biggest contributor to the GDP at almost 20%, other sectors such as manufacturing and transportation are also significant contributors. After 2.6% growth in 2016, S&P expects Croatia’s economy to grow to around 2.5% on average in 2019-2022.
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