The CNB Council reviewed today the latest monetary and economic developments and adopted the monetary policy projection for the period from 2019 to 2022. In addition, the Council examined a report on the banking system condition in 2018 and adopted several decisions on matters falling within its competence.
Monthly economic activity indicators suggest that real GDP grew in early 2019, following a stagnation at the end of the previous year. The annual consumer price inflation picked up from 0.2% in January to 0.5% in February, mostly driven by energy prices. The CNB continued to pursue an expansionary monetary policy, maintaining very high levels of liquidity in the domestic financial market. The annual growth of corporate and household lending accelerated slightly, largely owing to the faster annual growth in general-purpose cash loans. The current and capital account balance deteriorated in the last quarter of 2018, while the net external debt of domestic sectors increased. Favourable fiscal developments in 2018 were somewhat offset towards the end of the year by payments for guarantees issued to shipyards, but it seems that the general government budget again ran a surplus in the year as a whole.
The CNB Council also discussed economic developments expected in 2019. Bearing in mind that expected growth rates of Croatia’s main trading partners have been revised down, the real GDP growth rate is expected to be slightly lower in 2019 than in 2018. Risks to the growth projection are tilted to the downside due to a slower economic pace in a large number of countries.
Price movements in early 2019 show that the reduction in taxes on some products (fresh meat, fish, eggs, fruit, vegetables, over-the-counter medicines and diapers) pushed prices down more than anticipated in the previous projection. The average level of prices in 2019 may thus be lower than previously expected, which might give a boost to domestic consumption.
At its session today, the CNB Council approved the reappointment of Darko Drozdek and Andrea Pavlović as Members of the Management Board of Privredna banka Zagreb d.d., Zagreb.