At its session today, the CNB Council examined current economic and monetary developments, adopted a monetary policy projection and enacted several decisions on matters falling within its competence.
The CBS first estimate shows that economic activity decreased by 1.2% in the first quarter of 2020 from the previous quarter, according to seasonally adjusted data, with the result that the annual growth rate decelerated to 0.4%. The second quarter is likely to see an even sharper contraction in real GDP resulting from the coronavirus pandemic and containment measures implemented in April and a large part of May. The decline in COVID-19 cases and gradual relaxation of measures in late May seem to have partly lessened the contraction in some segments of the economy, which was coupled with the partial recovery of business and consumer confidence indices from their record low levels recorded in April. The first estimate also shows that labour market developments, following a significant deterioration in indicators in March and April, were less unfavourable in May. The annual consumer price inflation rate dropped to –0.2% in April from 0.6% in March, primarily due to a decrease in refined petroleum product prices. The average exchange rate of the kuna versus the euro appreciated in May from its average level in April before depreciating slightly in the last few days of May. In an effort to stabilise the kuna to euro exchange rate and respond to large individual foreign exchange purchases in the market, the CNB sold to banks smaller amounts of foreign exchange outside auctions on four occasions in May. The liquidity of the domestic financial system, supported by the CNB's expansionary monetary policy, remained very comfortable, which is also due to CNB’s purchases of government securities in April. The annual growth of total placements decelerated in April, with the strongest deceleration recorded in the growth of household loans and somewhat smaller in the growth of corporate loans.
The CNB Council also discussed expected economic developments in the whole of 2020, which could see a strong economic contraction due to decreases in goods and services exports, investment activity and household consumption. In addition, the average annual consumer price inflation is expected to decelerate in relation to the previous year, primarily due to the fall in refined petroleum product prices. The Croatian Government passed the revised budget in May, considerably reducing budget revenues envisaged for 2020 and forecasting a general government budget deficit of 6.8% of GDP.
The CNB Council approved the decisions on appointments made by several credit institutions’ supervisory boards: Hasan Ecesoy was appointed Chairman of the Management Board of KentBank d.d., Igor Repin was appointed Member of the Management Board of Sberbank d.d., while Marijan Kantolić was reappointed as Chairman and Verica Ljubičić as Member of the Management Board of Samoborska banka d.d.
The CNB Council issued approval to Erste&Steiermarkische Bank d.d. to merge with Erste Factoring d.o.o.
The CNB Council also adopted the Decision on the issue and sale of a commemorative silver coin marking the 75th anniversary of Victory over Fascism Day. The commemorative coin is to be released into circulation on 19 June 2020, immediately before 22 June – Anti-fascist Struggle Day.