March 31 (SeeNews) - Croatia's economy is expected to expand by 3.2% this year, the European Bank for Reconstruction and Development (EBRD) said on Thursday, lowering its previous forecast for a 4.2% growth made in November to reflect the global impact of the war in Ukraine.
In 2023, Croatia's economy is expected to expand by 4.0%, the lender said a Regional Economic Update.
After Russian armed forces invaded Ukraine, the world economy faced the greatest supply shock since at least the early 1970s, the EBRD commented.
Russia and Ukraine supply a disproportionately high share of commodities, from energy to metals to food to fertilisers. Prices of food commodities, oil, gas and metals increased sharply as markets anticipated a major reduction in exports from Russia, Ukraine and Belarus. The shortage of commodities started reverberating through supply chains.
Economies in central Europe, in addition, are closely integrated in manufacturing supply chains with Ukraine, the international lender noted.
Due to lack of deliveries of parts from Ukraine, a number of car factories had to partially or fully suspend production and look for alternative suppliers as hostilities escalated.
According to EBRD, tourism-dependent countries such as Croatia and Greece which, while not reliant on Russian or Ukrainian tourists, could suffer from a general drop in tourist appetite of Western European and North American countries because of higher costs and perceived heightened risks of spillovers from the conflict.
Tourism normally accounts for some 20% of Croatia's GDP.
Croatia's economy expanded 10.5% last year following an 8% contraction in 2019.