”The most important things coming up in Croatia are the HDZ's intra-party elections,” says Damir Topic, Senior Partner at Divjak Topic Bahtijarevic in Zagreb, of the ruling party. “Mid-March will see these elections concluded and we’ll see which direction the party will take.“ Former Croatian President Kolinda Grabar-Kitarovic, a member of HDZ, lost her bid for re-election in December, 2019 and stepped down on February 18 of this year According to Topic, “the right-wing of the party argues this is due to Grabar-Kitarovic taking a mellow stance (which apparently stems from the 'pro-liberal' orientation of current party’s leaders), which lost her the support of some of the more right-wing parts of the electorate.“
HDZ currently controls most seats in the parliament, but they only rule via a very wide coalition with seven other parties, and according to Topic, opposition voices within the party feel that the “Prime Minister is taking too much of a liberal and pro-EU approach to governing and that HDZ should pivot to more conservative values and stances.” One of the main collation partners is the Mayor of Zagreb, who is trying to push through (and is expecting HDZ’s support for) some huge infrastructural developments in Zagreb. HDZ is expected to support his plan because the Mayor’s parliamentary party’s support is crucial for the coalition to maintain power. However, Topic reports, the local organization of HDZ in Zagreb failed to provide the expected support in the first attempt of voting for the Mayor’s plan.” Croatia is expected to have parliamentary elections before the end of the year.
Topic reports that the political turmoil is beginning to affect the parliamentary agenda. “Some things that were due to be put to a vote were pulled. Nothing major yet, but I feel like this may be a direct consequence of the issues HDZ is facing internally.” In addition, he says, Croatia needs a new Attorney General, as the previous one “was forced to resign when it was revealed that he was a Free Mason.” According to him, “the process of selecting a new AG won't start until after the HDZ internal elections."
“The situation is kind of like a vacuum at the moment,” Topic says. “The economy and the business sectors are doing their thing, and the politicians are doing their own – which may be better, all things considered.”
Finally, Topic reports that Croatia’s IT and retail sectors are booming, with “people spending a lot recently.” However, Croatia’s biggest generator of budgetary resources has always been tourism – which may suffer this year due to the coronavirus. “We only have four or five cases confirmed so far,” he says, “but if there are any more this may lead to fewer tourists – which can be rather bad with tourism representing some 20% of GDP.”
Otherwise, Croatia is expected to experience around 2.6% of growth this year (in 2019 it was 2.9%), which Topic reports was “not only stated by the Finance Minister but is also consistent with projections by the World Bank and the EBRD. It is yet to be seen if this will happen – our biggest trade partners are Italy and Germany, and we have still no idea how the coronavirus will impact their economies.”
