On Friday, Standard & Poor’s raised Croatia’s long-term credit rating from ‘BBB+’ to ‘A-’, with a positive outlook, highlighting that deeper integration with European and global partners has spurred reforms and resulted in broader institutional improve-ments. The ‘A’ rating signals strong capacity to meet financial obligations, with a certain degree of vulnerability to economic conditions and changes, reports HINA.
S&P notes that the rating upgrade is primarily driven by positive economic indicators, fiscal consolidation, successful implementation of the National Recovery and Resilience Plan (NRRP), and political stability.
It is emphasized that alongside key policies anchored within the NRRP, the government continues to implement reforms and investments utilizing European funds, which have the potential to strengthen economic resilience, improve productivity, and enhance the overall business environment.
Tourism a key driver
Tourism remains a key driver of Croatia’s economic growth, which is expected to grow by an average of three percent annually from 2024 to 2027, twice as fast as the Eurozone average, S&P points out.
This will build upon the strong wealth growth seen in recent years and support the steady alignment of Croatia’s income with the Eurozone average, they add.
Croatian authorities are also continuing with reform programs, which, together with significant investments supported by Next Generation EU funds, could further im-prove Croatia’s economic growth potential by expanding its structure and increasing productivity, despite unfavorable demographic trends.
The positive outlook indicates that the ‘A-’ rating could be upgraded in the next two years if Croatia’s economic and external resilience continues to strengthen, supported by ongoing economic reforms and budget consolidation, S&P notes.
Secure energy supply
S&P concludes that during the three-year period from 2021 to 2023, Croatia’s GDP grew by an average of 7.6 percent, more than twice as fast as the EU average, and they forecast an average growth of three percent for the 2024–2027 period. In addi-tion to budgetary balance, the government’s efforts to further reduce the public debt ratio to below 60 percent of GDP have been welcomed.
In terms of achieving energy security, S&P points out that Croatia has diversified its energy sources over the past three years, primarily thanks to the construction of the LNG terminal on the island of Krk.
Source link : https://www.thedubrovniktimes.com/news/croatia/item/16978-agency-standard-poor-s-upgrades-croatia-s-long-term-credit-rating-to-a-with-positive-outlook
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Publish date : 2024-09-14 07:00:00
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