Near-term growth prospects are favorable, supported by strong tourism and private consumption, and a significantly improved fiscal position and external environment. The economy is operating close to potential. Growth is expected to decelerate if enduring structural constraints are not addressed. The largest private company, Agrokor, has been facing a financial crisis and put under caretaker management. The impact of this crisis on the economy has been contained thus far. Risks to the outlook are two sided, with downside risks dominating over the medium term. The pace of structural reform implementation has been slow and additional delays constitute a downside risk.
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