Rainy June further clouds Croatia's crucial tourism outlook

Jun 29, 2009, 10:17 GMT

Zagreb - Croatia is bracing for a huge decline in tourism as a rainy start to the summer season has aggravated the negative effects from the global financial crisis, a report said Monday.

There were 9 per cent fewer tourists in Croatia in the first five months of the year - and the fall is expected to accelerate to between 12 and 15 per cent in the first half - the internet portal Index said.

Though some areas, such as Istria in the northern Adriatic, reported growth in the period, the overall negative picture was made bleaker by measurements showing the most rain in the month of June in the past 50 years.

Hotels in Croatia's best-known resort, Dubrovnik, along the south of its 1,100-kilometre coast, have cut their prices by as much as 50 per cent. But guests remain scarce.

Since tourism is the largest single contributor to the heavily- indebted Croatia's economic growth, the situation is alarming, experts warned.

'In case of a bad season, Croatia will go bankrupt,' the owner of the elite Jadranski Luksuzni Hoteli group, Goran Strok, warned earlier.

Last year Croatia raked in more than 7 billion euros (9.9 billion dollars) from tourism, or roughly one-quarter of its gross domestic product.

This year it expects between 700 million and 1 billion euros less, which could add to the financial crisis and hamper Croatia's ability to service its bloated 40-million euro foreign debt.

Economists so far predict a 3-5 per cent recession in Croatia and say it may have to seek an arrangement with the International Monetary Fund to anchor its stability.