At its session today, the Croatian National Bank Council examined the latest economic and monetary indicators and adopted a monetary policy projection for the period up to 2019 as well as several decisions falling within its sphere of competence. 

Discussing economic developments, the CNB Council concluded that economic recovery continued into 2016 and that the expected annual real GDP growth will be 2.3%. Foreign demand might again make the biggest contribution to economic growth, but all the elements of domestic demand are also expected to rise. Growth in personal consumption might exceed that in the previous year, owing to faster growth in employment and real gross wages. Positive developments are expected to continue into 2017, when the expected growth in real GDP might accelerate to 2.5%. The economic recovery is taking place against the backdrop of the still present fall in the consumer price index which could reach –0.9% in 2016, as a result of a fall in energy prices, however, in 2017, prices are expected to rise by 1.2%. The surplus in the current and capital accounts might shrink. Favourable fiscal developments continue. While maintaining the stability of the exchange rate, the CNB will continue to pursue an expansionary monetary policy, supported by structural repo operations. Such orientation adds to favourable financing conditions for all the domestic sectors and is accompanied by a small recovery in domestic lending.

The exposure of the domestic financial system to system risks has fallen slightly due to recovery and acceleration of economic activity and the expected further fiscal adjustment efforts. In addition, short-term developments point to smaller vulnerability of the private non-financial sector and further favourable financing conditions on the domestic and international financial markets. Nevertheless, structural vulnerabilities such as relatively high public and external debt continue to pose a great threat to financial stability, particularly in the case of a more significant growth in interest rates, or risk aversion on the international market.

At its session, the CNB Council also approved the proposals submitted by supervisory boards of several credit institutions for new appointments or extension of terms of office on their management boards. The new member of the Management Board of Banka Kovanica d.d., Varaždin is Ivan Mužić. Borislav Centner will continue to act as member of the Management Board of Erste&Steiermarkische Bank d.d., Rijeka and Petar Rajković will become a new member of the Management Board of Vaba d.d., Varaždin.

The Croatian National Bank Council has also issued an authorisation to a credit institution BKS Bank AG, Klagenfurt, Republic of Austria, for merger by acquisition of BKS Bank d.d., Rijeka, the first cross-border merger by acquisition of a Croatian bank in foreign ownership.