October 9, 2023

After S&P, Fitch revised Croatia’s outlook to positive

Croatia's credit rating

After the S&P agency maintained Croatia’s rating at BBB+ in mid-September this year and revised the outlook for Croatia’s long-term rating from stable to positive, the Fitch agency did the same on Friday. Croatia’s credit rating has been maintained at the highest investment level of BBB+, while the outlook has been revised from stable to positive.

Two global credit rating agencies within a few weeks maintained the highest investment level of Croatia’s credit rating and revised the outlook from stable to positive. The Fitch agency found that compared to the pre-pandemic fourth quarter of 2019, Croatia achieved a cumulative GDP growth of 13%, which is the second best result in the EU. Strong government measures, as well as the agility of Croatian businessmen and workers contributed to the quick recovery from the pandemic and energy crisis. The agency’s report recognized the importance of membership in the euro area, as well as achievements in terms of political, economic and financial stability, budget balance, the decline in the share of public debt in GDP and the implementation of reforms under the Recovery and Resilience Plan. Croatia’s credit rating was below investment level, and now it is on the verge of reaching A level.

Following the adoption of a new package of government measures and discussions held with representatives of retail chains, Fitch expects a further slowdown in inflation in Croatia. At the same time, they estimate that economic growth in the period 2023-2025. should average 2.7%, compared to the euro area average of 1.1%.

Croatia is among the fastest countries in withdrawing funds from the EU Recovery and Resilience Mechanism, and after the third installment is paid, it will be the first country in the EU to withdraw over 50% of the allocated grants. Croatia is the only country whose credit rating has been increased by two notches by all three credit rating agencies since the beginning of the COVID crisis until today.