"Calm down, it could have been a lot worse" - under this title "Politico" published an article about Croatia's experience with the euro and the lessons that Bulgaria can learn.
What can Bulgaria learn from Croatia's experience with adopting the euro? This question is asked by an analytical material by the European publication "Politico". According to the authors, the main conclusion is one: Bulgarians should leave behind apocalyptic scenarios for the country's future after entering the Eurozone. Experts say that Croatia, which is the last European country to join the common currency, is an example of a successful transition and a model that Bulgaria can follow for its integration into the eurozone.
Since Croatia joined the eurozone, inflation in the country has been slightly higher than before. However, this is largely due to other problems, not to joining the common currency. At the same time, last year, the growth of the Croatian economy was among the largest in the EU with 3.8 percent, writes "Politico". This is also related to the tourism sector in the country, which is flourishing. Unemployment in Croatia reached its lowest levels since statistics were kept in 1996.
European funds also continued to flow into the country, as the government is doing everything according to plan, writes the European publication and emphasizes that 4.5 billion euros have entered Croatia under the Recovery and Resilience Plan. Perhaps most importantly, wages have increased by 30 percent since Croatians swapped the kuna for the euro.
Turbulence upon entering the eurozone
Croatia and Bulgaria entered the so-called "waiting room" of the eurozone at the same time in mid-2020. At that time, however, a series of shocks to the global economy caused inflation - significantly higher than that in the eurozone: 13 percent in Croatia at its peak and nearly 19% in Bulgaria. People in both countries have become much more sensitive to potential new price increases.
Inflation in Croatia is now among the highest in EU countries. However, experts believe that this is not due to the adoption of the euro, writes "Politico". Petar Soric from the Faculty of Economics and Business at the University of Zagreb explains to the publication that one must take into account the fact that Croatia is the only country that joined the eurozone in conditions of serious inflation. Thus, consumers had a hard time determining what exactly caused the price increase.
The concerns of Croatians after the adoption of the euro were also based on some quite legitimate examples - for example, Slovenia, where prices jumped by 9% after entering the eurozone in 2007. University of Zagreb expert Fran Galetic recalls that Croatia is trying to calm people down by obliging all supermarkets to display prices in both currencies four months before the adoption of the euro and a whole year after - something that Bulgaria is currently doing.
However, many Croatian retailers raised prices even before the rule came into force, so that they could claim that they had not raised them, Galetic tells "Politico". Prices in Croatia have risen significantly in the 18 months surrounding its entry into the eurozone. Bulgaria should learn from the Croatian experience, the European publication writes.
According to Petar Soric, Bulgaria is in a better position than Croatia was in 2023. Inflation is much more stable and accordingly it will be much easier to monitor artificially inflated prices and punish vicious practices, the expert believes.
Success story
In summary, experts agree that joining the common European currency has more benefits than disadvantages. The director of the European Relations Department at the Croatian National Bank, Ana Šabić, calls the country's adoption of the euro an "absolute success story."
High currency conversion fees are a thing of the past, and the country's credit risk premium over Germany, reflected in government bond yields, has almost disappeared, writes "Politico". The national bank estimates that the country saves about 160 million euros a year in currency conversion and transaction fees alone.
Šabić is pleased that Croatia has experienced all the expected benefits of joining the eurozone, even though this happened in turbulent times. The expert warns Bulgaria that "detailed and timely planning", as well as "clear division of tasks and responsibilities between the institutions involved are key".