Croatia's GDP will grow 0.4 per cent next year, while budget deficit will climb up to 3.6 per cent, the IMF says in its Europe Outlook, presented last week in Zagreb by Srobona Mitra, economist in the IMF's European Department.

Such a growth seems good from today's perspective, in which GDP will drop 5.2 per cent, but it is still much lower than the average predicted growth in the region.

Croatia has the lowest GDP growth prediction out of 11 fast-emerging countries included in the IMF's report. Mitra says the problem with Croatia's economy is the fact that the growth from previous years was mostly based on foreign capital.

Mitra also announced a meeting with representatives of Croatia's government this week. The key risks for Croatia are growth of financing cost and availability of assets. Mitra explains that one of the difficulties is the fact that banks in Croatia are mostly foreign-owned, while Croatia has so far relied on their capital.