Croatia readies its export drive ahead of EU entry

ZAGREB – Croatia aims to launch an export-boosting drive this year to reduce its huge foreign trade deficit and spur economic growth, economic officials said yesterday. «We want to at least balance our exports and imports, if not reach positive territory. It’s not an easy task and we’ll need years, but it’s definitely the path we want to pursue,» Economy Minister Branko Vukelic told a news conference. The trade deficit in the first 11 months of 2006 amounted to $10.3 billion, almost a quarter of Croatia’s gross domestic product. Exports cover less than a half of imports and the deficit is only partially offset by tourism. Zagreb, which opened EU entry talks in late 2005 and hopes to join by the end of the decade, wants to improve the competitiveness of its economy ahead of entry to reduce the risk of a post-accession shock. Most local firms, often enjoying privileged treatment by the state and retailers, are bent on maintaining their share of the home market. Some are trying to expand in the region and very few export globally. Zagreb also wants to narrow the high current account deficit of some 8 percent of GDP and boost growth, which has been between 4 and 5 percent in recent years. «We want sustainable growth that will not be based only on domestic consumption and state investments because this cannot survive in the long run. I see this initiative as a new direction in our economic development,» said Nadan Vidosevic, who heads the Croatian Chamber of Commerce. Vukelic said the strategy is based on a similar Austrian model, which at the end of the 1990s turned Austria into one of the leading European exporters. «The strategy envisages a set of measures, with exact benchmarks, whose aim is to help our companies find their way onto foreign markets,» Vukelic said. He said details would be presented at a local exporters’ conference later in January. Barely 15 percent of Croatian firms are currently able to export their products and Vukelic said the government wants to increase their number by 25 percent in the next three years. «We also want to increase the number of exported products with added value as our export largely turns around basic products. In other words we want to export furniture instead of wooden boards,» Vukelic said. To help small companies find foreign markets, Croatia has formed clusters of firms involved in bottled water, textile, information and communication technology, fishing, small shipbuilding and wood-processing industries. It also wants to substitute a considerable portion of imported raw materials now used for domestic production with locally produced ones.

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