Croatia's leading and partly state-financed economic institute, the Zagreb Economic Institute, said in its outlook on Tuesday that the country's economy is heading for its fifth year of contraction in a row despite the government's hopes that more investments could spur recovery and ahead of its joining the EU in July.

The institute forecast a contraction of 0.2% this year, but expects a recovery of 1.5% in 2014. "We revised our forecast downwards due to weak prospects for euro zone recovery and persistent negative trends in the Croatian economy. Domestic demand is still falling, while there is a delay in investments in the public sector," the outlook said.

Source: bne