Primorac on inflation: next year they could beat her

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Speaking at the conference « Sustainable Tax System: Politics, Practice and Perspectives », Primorac touched on the forecast EC related to Croatian economic growth and inflation. Namely, the Commission announced on Monday that after a growth of 3.9 percent in 2024, it is expected to grow 3.2 percent for the Croatian economy this year, while inflation, after four percent, should slow down at 3.4 percent this year, and next to two percent, mainly due to reducing the inflation of food and services price.

Primorac pointed out that the EC prognosis showed exactly what was the goal of the Government of the Republic of Croatia, which is that in the coming periods the multiple growth rate of the economy of the Republic of Croatia is provided in relation to the EU and the Eurozone average. He emphasized this growth for this and next year will be three times higher than the EU average.

« This is exactly something that contributes to the standard of citizens, but also to improve the entrepreneurial climate, the growth of the economy. As for inflation pressures, according to our expectations, there is a decrease in the expected inflation rate, which is also good, » Primorac said, adding that the trend of slowdown in inflation will continue.

Asked if we can say that inflation was finally overwhelmed if it would be two percent next year, the minister answered in the affirmative. « I think that, since the inflation rate of about two percent is a natural rate of inflation, this is something that is not trying to suppress itself, » Primorac said.

He believes that the increase in economic growth increases demand, especially if this growth is powered by gross investment in fixed capital, such as in Croatia in the private sector, strong investments in the public sector, which are primarily aimed at increasing and improvement of infrastructure and after earthquake renewal. On the other hand, he said, if the growth of the economy is powered by private consumption, which we also testify in Croatia, it also stimulates the growth of aggregate demand, but also affects inflation pressure.

« We believe that this combination of macroeconomic indicators in Croatia and the rate of inflation that is continuously reduced and goes towards the target level of two percent something that was good for the Croatian economy, » the Minister said.

In connection with taxes, he said that some major tax changes were not expected in the rest of the year. He reiterated that the Tax Administration is currently working on three important project digitization projects. The first is the establishment of a population register, which will be fully functional since June 2026, the second key project is Fiscalisation 2.0. and expansion of fiscalisation 1.0, while the third project is a digital transformation of the Tax Administration.

Jelusic: Good business climate in Croatia

Amchama Director Andrea Doko Jelusic emphasized that Amcham, facing primarily with inflation and need to keep and attract qualified workforce, has prepared recommendations for the improvement of the tax system this year. Among other things, they propose to raise a non -taxable deduction to 970 euros, and they want to limit the allocation for health insurance contributions, as already made with pension insurance contributions.

« Also in the middle time we believe that it would be good to continue going to lower the income tax rates from 30 to 20 percent and then from 20 to 10 percent, » said Doko Jelusic.

She added that as far as a business climate research with members of Amchama Croatia in a great position is concerned.

« Our members speak of a very good business climate in Croatia, comparing it to other Central and Eastern European countries. We know that the macroeconomic framework is very favorable with excellent credit rating and we consider the right time for more investment in research and development of investment, » Duko Jelusic concluded, adding, on the other work load, whether taxes or contributions and inflation.