Filenews 9 January 2023
Not only is it not shaken, but it is expanding, with the admission of a new Member State. This is the message for the Eurozone, which European decision-makers have joyfully conveyed, starting with ECB President Christine Lagarde, as the advent of the new year has brought Croatia into the midst of monetary union. According to a report on capital.gr website, in the midst of a winter marked by the inflationary and energy crisis accelerated by the war in Ukraine, this planned development runs counter to the pessimism that is spreading on many sides about the resilience of the Old Continent.
In addition to being the 20th member state of the Eurozone, Croatia also became the 26th member of the Schengen area, even ten years after joining the European Union - a development indicative of the attractiveness of the project of European integration in the so-called "New Europe" or at least the western Balkans. Because, for the rest, Poland, Hungary and the Czech Republic are in no hurry to adopt the euro. For a country that carried out 95% of its external transactions in euros, the abandonment of the national currency kuna seemed almost inevitable. However, at a time when inflation has climbed to 13% year-on-year, the fear of the appreciations that the change of currency will bring is entirely real, no matter how much the central bank (which now has its own position in the management of the Eurosystem) insists that the impact will be minimal and the harmonised annual index of consumer prices will land at 7.5% in 2023.
In any case, Croatia of only four million inhabitants, which gained independence in 1991 amid the chaos of Yugoslavia's dissolution, boasts that it has already been promoted into the narrower circle of European unification. However, the country, which relies mainly on tourism, is suffering from high debt (85.3% of GDP), low incomes per capita (at 65% of the European average), inefficient public administration, corruption (60th place in the world in the Corruption Perception Index) and most importantly rapid demographic deterioration, as high unemployment (17.38% on average in the period 1996-2018) has pushed many Croats to emigrate. The enlargement of the Eurozone gave a symbolic note of optimism, but even in the field of the real economy the data are far from confirming the Kassandras so far. Of course, climate change has also helped in this, as energy needs have been smaller than expected for such a time, with the result that any reserves that have been built will be sufficient, despite the geopolitical shocks.
