Post by kesterj on Dec 6, 2014 10:11:33 GMT 1
This is truly shocking news.
Peter Attard Montalto, the chief analyst with Nomura International, has just put Croatia under the spotlight. This is the lead to his report. Note his concluding sentence.
Croatian politicians and bureaucrats - the ones who try to leverage their power by extorting bribes for services that they should provide as a matter of duty - had better wake up and change. Because otherwise, this is only going to get worse.
Yearly growth has now been negative for 11 quarters in a row, and barring two quarters of small growth in 2011 that number rises to 22 quarters. The size of the economy is now some 13% smaller than it was in September 2008. What is going on? We find a lack of reform has held back domestic demand while a lack of investment or reform has severely constrained export potential. The situation looks unlikely to change ahead of the elections which have to occur by February 2016. Croatia needs a shock or crisis to jump it out of its current situation, but none is on the horizon in the current global liquidity environment. While valuations in credit look stretched, continued yield-hunting means a more tactical approach is needed to shorting – an opportunity that may appear after ECB QE at the start of 2015.
Looking at Figure 1, the shape of Croatia’s growth dynamics is not that dissimilar from other countries in the region – an extended period of low domestic demand, but in two noticeable waves through early 2009 and then H2 2012, with offsetting shifts in the trade balance to being net contributor as imports shrank faster than exports. However, the size of the falls in domestic demand are much greater in the case of Croatia, while there appears to have been lower contributions from net trade thanks to much weaker export demand.
We place the blame for that at the door of very weak FDI – itself caused by structural issues, corruption and other impediments to doing business.
Peter Attard Montalto, the chief analyst with Nomura International, has just put Croatia under the spotlight. This is the lead to his report. Note his concluding sentence.
Croatian politicians and bureaucrats - the ones who try to leverage their power by extorting bribes for services that they should provide as a matter of duty - had better wake up and change. Because otherwise, this is only going to get worse.
Yearly growth has now been negative for 11 quarters in a row, and barring two quarters of small growth in 2011 that number rises to 22 quarters. The size of the economy is now some 13% smaller than it was in September 2008. What is going on? We find a lack of reform has held back domestic demand while a lack of investment or reform has severely constrained export potential. The situation looks unlikely to change ahead of the elections which have to occur by February 2016. Croatia needs a shock or crisis to jump it out of its current situation, but none is on the horizon in the current global liquidity environment. While valuations in credit look stretched, continued yield-hunting means a more tactical approach is needed to shorting – an opportunity that may appear after ECB QE at the start of 2015.
Looking at Figure 1, the shape of Croatia’s growth dynamics is not that dissimilar from other countries in the region – an extended period of low domestic demand, but in two noticeable waves through early 2009 and then H2 2012, with offsetting shifts in the trade balance to being net contributor as imports shrank faster than exports. However, the size of the falls in domestic demand are much greater in the case of Croatia, while there appears to have been lower contributions from net trade thanks to much weaker export demand.
We place the blame for that at the door of very weak FDI – itself caused by structural issues, corruption and other impediments to doing business.
? why? If that is the concensus, how will things ever improve.....surely a more positive attitude is required?
