Croatian economy expands at 4.6-4.7 percent pace in the first half of 2006

ZAGREB (Reuters) – Croatia’s economy expanded some 4.6-4.7 percent year-on-year in the first half of 2006, Prime Minister Ivo Sanader told a cabinet meeting yesterday, a day before the official release of the figures. Sanader was quoted by the state news agency Hina, which usually reports details of cabinet meetings. The Croatian economy grew 6.0 percent in the first quarter year-on-year. The state statistics bureau is due to publish the second quarter growth data today. Analysts’ forecast second-quarter growth at between 2.8 and 3.5 percent, with an average of 3.1 percent. The government sees growth this year at around 4.5 percent, slightly stronger than 4.3 percent in 2005, and most analysts deem the projection realistic. The International Monetary Fund recently revised upward Croatia’s growth forecast for 2006 to 4.6 from 4.1 percent. Croatia hopes to accelerate growth to between 5 and 7 percent annually in the coming years. But some analysts warn that such ambitions may be difficult to pursue if the government implements much needed structural reforms, which could result in job cuts and a slowdown in growth, at least initially. «A temporary growth slowdown to around 3 percent would not be a bad thing, if it were the result of structural reforms that would also help fiscal consolidation,» Goran Saravanja, an analyst at CAIB investment bank said.