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Croatian central bank governor talks down Agrokor impact

The restructuring of indebted retail giant Agrokor shook Croatia earlier in 2017, but central bank governor Boris Vujčić tells Stefanie Linhardt that the country's economy is still on course for growth, though some banks could take a hit on their profit sheets.
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Q: Croatia has made headlines in 2017 with the troubles at its largest retailer, Agrokor. Some experts assume the potential economic impact on the country will be significant, and talk of a potential widening of the government deficit by 0.6 percentage points. How significant a risk do you assess Agrokor to be for Croatias economy?

A: We’re expecting the impact of Agrokor’s restructuring on economic activity to remain modest. Our current forecast for gross domestic product [GDP] growth in 2017 of 3% – which incorporates the impact of the restructuring – is the same as the one we had before Agrokor’s troubles emerged. Had there been no Agrokor case, growth in 2017 would probably exceed 3%, which gives our assessment of Agrokor in terms of impact on growth of 0.3 to 0.4 percentage points.

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