The International Monetary Fund (IMF) has lowered growth projections for the Croatian economy and now expects a decline of 0.5% in 2012, to be followed by a rise of 1% next year, the IMF said in its World Economic Outlook on Tuesday.

In its previous report, published in the autumn of 2011, the IMF forecast growth of 1.8% for the Croatian economy for 2012.

The IMF expects the global economy to slow to about 3.5% in 2012, following a rise of nearly 4% last year. Economic activity should pick up in 2013 to return to a rise of nearly 4%. Weak economic activity in the second half of 2011 and in the first half of this year was seen as one of the main reasons for this year's deceleration.

The Croatian economy stagnated last year, with the zero growth of GDP. In its autumn projections, the IMF forecast growth of 0.8%. According to its latest estimates, Croatia's annual inflation rate, according to the harmonised consumer price index of the European Union statistical office Eurostat, is forecast at 2.2% this year and is expected to gain pace to 2.4% in 2013.

Croatia's balance of payments current account is expected to show a surplus of 0.4% of GDP this year, while a deficit of 0.2% is projected for next year. Unemployment is expected to increase to 13.5% in 2012, after which it should drop to 12.7% in 2013. According the latest estimates of the IMF, the unemployment rate in 2011 was 13.2%.

In the New Europe region, which includes Croatia, the IMF expects growth of 1.9% in 2012 and of 2.9% in 2013. This region also includes Turkey, Poland, Romania, Hungary, Bulgaria, Serbia, Lithuania, Latvia, Bosnia and Herzegovina, Macedonia, Montenegro, Albania, and Kosovo.

For the 17-member eurozone, the IMF forecast a slight recession in 2012 as a result of the debt crisis, effects of fiscal consolidation, and general loss of confidence. The eurozone can expect a GDP decline of 0.3% this year, which should be followed by 0.9% growth in 2013.