Since the beginning of the year, Croatia and Russia record increased our turnover by 45%. The turnover reached $900 million. However, Zagreb is making a major bet on the development of relations with Moscow, and the plan of European integration. Croatia plans to adopt the Euro already by 2023. Change in policy and orientation towards Europe, threatening the collapse of the national economy and the fall in the incomes of ordinary citizens, analysts warn.
For the first half of 2019, the turnover between Russia and Croatia increased by 1.5 times — up to 45%. During this time the country managed to sell each other goods for $890 million, recent statistics from the Ministry of agriculture of the Russian Federation.
Major joint projects of the two States are holding Fortenova Grupa (major Corporation in the food industry and retail trade in Croatia), as well as gasification plant Ford with the participation of “Zarubezhneft”, which is scheduled for October 2020.
Despite increased cooperation with Russia, Croatia does not abandon its plans to enter European markets. By 2023 the country plans to join the European exchange-rate mechanism (ERM II) and to adopt the Euro. July 8, current year
Croatia has sent an official letter about the desire to enter the Eurozone.
“This is the first important step for entry into the Euro zone. The government of Croatia has outlined a plan of action. It will allow for a smoother transition,” — commented the Chairman of the Eurogroup Mario Centeno.
For joining the Eurozone are also local residents. According to the results of a survey conducted this year by the Central Bank of Croatia, 52% of respondents were in favour of the adoption of the Euro, 40 percent opposed. The rest declined to answer.
However, in order to adopt the Euro, one plan is not enough. According to the rules of the Eurozone, for a successful transition to the new currency, the budget deficit of the candidate country must not exceed 3% of GDP, public debt no more than 60% of GDP. Inflation cannot exceed the average level in the three EU countries with the most minor indices of more than 1.5%.
In addition, the state should ensure high stability of the banking system. In addition, it is necessary to strengthen the partnership with the ECB and to show good financial growth. This is now the regulator of Croatia, helping the national currency to fluctuate in the range of 7.4 to 7.7 coons per Euro. Without such interventions the economy can not cope.
In the pursuit of cheap loans
The adoption of the Euro promises of Croatia preferential interest rates on loans from the ECB point of the respondents. Besides, now the generally low interest rates in the Euro.
“Also, of course, such a step will increase investment in the country. After all, currency risks will be reduced. Investors will be able to plan projects with a return in euros. It is more clear and stable currency. In addition, reduced costs, as companies will be less to exchange national currency into euros,” — says a senior analyst “BKS the Prime Minister” Sergey Suverov.
However, the advantages of joining the Euro area injected.
As a rule, the transition to the Euro has a negative impact on the economy. For example, the GDP of Slovakia before joining the Euro area in 2009 was at a rate of 2% to 5% per year. After the Euro changeover, the index fell to 1% and 2.5%. Similar dynamics was also observed in neighboring Slovenia. The country’s GDP growth before joining the Euro area showed an average of 1% -2%, and then fell to 0.5 – 1%.
“And for example, the GDP growth of Estonia before joining the Euro zone in 2011 was a rate from 0% to 4% year-on-year on average, after joining the Eurozone, he is reduced to 0% – 2%.
In fact it is a transition to voluntary slavery, and dependence on solutions of strong players, the EU,” says analyst management operations on the Russian stock market IR “freedom Finance” Alexander Osin.
He believes that the transition to the Euro is beneficial only to the banking and retail segment. That is, industries in the chain of “value added” closest to consumers and has on this background, the potentially higher margins.
“For the less profitable sectors — primarily manufacturing — joining the Euro zone means a decline in the dynamics of consumer and investment demand, which — judging by the dynamics of GDP — not kompensiruet reduction in the cost of credit”, — the expert believes. Not having opportunities for meaningful growth, developing countries have been accumulating debt and the deficit in mutual trade with the basic countries of the European stability mechanism.
As a result, in the profits remain the only founding countries of the Union. For example, the trade surplus of Germany, which in the 90s was from 0 to 6-8 billion euros, after the creation of the Eurozone increased to 15 billion And with the advent of new countries soared to 20-25 billion euros by mid-2010’s.
The Eurozone economic model in this context is a reduced copy of the American financial model. The base of the country to lend to and Fund a peripheral, which, in turn, on the basis of these loans and the cash flows of the banking system to support trade balances base, Mature countries, Osin explains.
Meanwhile, the transition to the Euro in the end would only affect the ordinary citizens of Croatia.
The transition to the Euro will inevitably lead to higher prices in the country, as it was in Estonia and Latvia. There the commodities have risen by about a third. The salary has not increased since the EU is not interested to invest in aligning the economies of its new members with economies of stronger countries.
“Thus, the standard of living of the population of Croatia as a result of this decision will fall. There is a danger of capital outflow from the country due to the decline in Deposit rates during the Euro changeover, which can lead to extremely negative consequences for the economy. Most likely, the transition of Croatia to the Euro is political rather than economic decision,” — said in a conversation with “the Newspaper. EN” analyst marketing agencies Comagency Elena Yushkova.
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