Chaired by Governor dr. Marko Skreb, the Council of the Croatian National Bank held its regular meeting on Wednesday, February 9, 2000. The agenda included, among others, the information on monetary and economic developments, as well as a review of foreign investments role in the process of economic development.
Regarding monetary and economic developments, the Council concluded that previously noted macroeconomic trends in real GDP and employment have stabilized, while basic indicators of stability have remained at a satisfactory level. The kuna depreciated against the German mark by 0.43%, which is seasonally considerably less than in comparable periods of 1998 and 1999, when the kuna depreciated by 1% and 0.9%, respectively. In terms of the nominal effective exchange rate - i.e. a representative sample of currencies in the CNB exchange rate list - the kuna depreciated by 0.46%. Simultaneously, prices grew by 4.6% in January (measured by retail price index) or 3.8% (measured by the cost of living index) compared to the same month last year. In the same period, industrial products' prices increased by 7.6%, mostly due to a significant rise in the price of energy sources (petroleum derivatives).
The Council reviewed the impact of foreign investments on the process of economic development. The Council members specifically considered the correlation between exchange rate policy, structural reforms and the problem of stagnating Croatian exports. They concluded that, in conditions of exchange rate stability, structural reforms are necessary in order that direct foreign investments in a small open economy - such as the economy of the Republic of Croatia - expedite an increase in exports and a consequent growth in real BDP.