Christine Lagarde, the President of the European Central Bank (ESB), spoke at a conference in Dubrovnik, Croatia, on Friday. She stated that Croatia has a slightly higher inflation rate than the eurozone average, but attributed it to the country’s high economic growth compared to other eurozone member countries.
Lagarde acknowledged that the introduction of the euro had a mild impact on inflation in Croatia, estimated at around 0.4 percent on average. She expressed confidence in the downward trend of inflation continuing and projected that inflation would reach the target level of around two percent by the second half of 2025. Lagarde noted that Croatia’s high economic growth rate is linked to its above-average inflation rate, and highlighted that the country also has a lower unemployment rate than the eurozone average.
As part of the Eurozone with 20 members, Lagarde emphasized the importance of implementing a monetary policy that benefits the entire monetary community. She praised Croatia’s serious and disciplined state and economy, expressing satisfaction with the cooperation with CNB Governor Boris Vujčić, who is also a member of the Governing Council of the ECB.
Vujčić addressed issues related to labor market challenges such as lack of qualified labor in Croatia and discussed potential solutions like increasing participation rates among working-age population or immigration options to address this issue. Vujčić also highlighted concerns over non-purpose cash loans and emphasized their potential risks for financial stability.
The conference served as an opportunity for dialogue between academic experts, international financial institutions, central banks and financial sector participants covering topics including inflationary expectations, central bank decision-making models, global supply chain changes and impact monetary policy on credit and deposit interest rates.
Overall discussion focused on topics such as how central banks should handle rising inflationary pressures while maintaining price stability; what role should global finance play in stabilizing economies; and whether digital currencies could have an impact on traditional banking systems.
In summary, Christine Lagarde highlighted positive aspects of Croatian economy while addressing challenges such as inflationary pressures and labor market issues during her speech at Dubrovnik conference.
