Croatia's COVID-19 Crisis Management: From Well-Played Half-Time Towards Gradual Meltdown in the Second-Half

Introduction
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At the outset of the pandemic in March Croatia was on a steady course in terms of economic growth. Croatia was among the minority of EU member states that still managed to finish the first quarter of 2020 with a 0,3% growth, year on year. According to the Economic and Fiscal Policy Guidelines 2020-2022 Government expected real economic growth of 2,5% in 2020 and a continued reduction in the public debt to GDP ratio down to 68%, in line with its determination to proceed with an ambitious goal to adopt the euro in 2023.1 Notwithstanding the fact that during Plenković’s reign fiscal policy could have been even more counter-cyclical, which could have provided for even faster reduction in public debt, as well as the fact that Croatia proved as a laggard in implementing Country Specific Recommendations under the European Semester, Croatian economy benefited from several years of a relatively favourable external environment. Twin deficits (fiscal and current account) turned into surpluses since 2015 and Croatia’s external position improved markedly. Things were starting to look only sour at the end of February but nobody seriously expected what came with full force in the following months.

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