Republic of Croatia : 2009 Article IV consultation : staff report : public information notice on the Executive Board discussion : and statement by the Executive Director for the Republic of Croatia
1. Strong capital flows and rapid credit growth in recent years helped Croatia reach high levels of prosperity, but also increased vulnerabilities. Annual GDP growth accelerated to 4-5 percent, per capita incomes advanced further toward the EU average, and unemployment declined to the lowest levels since Croatia's independence (Table 1). But domestic and external imbalances also widened considerably. Rapid credit growth led to a significant debt build-up; prevalent foreign currency borrowing aggravated balance sheet vulnerabilities; and booming domestic demand led to surging trade deficits, moderated only partially by strong tourism earnings
