• Ruling Social-Democrats lag behind opposition HDZ in polls
  • Croatia's six-year recession, migrant crisis are key issues

Croatia will hold general elections on Nov. 8, President Kolinda Grabar-Kitarovic said in a statement on Monday, as Prime Minister Zoran Milanovic’s government fights to stay in power following a six-year recession.

Milanovic’s Social Democrats are trailing the opposition Croatian Democratic Union after the European Union’s newest member began recovering from an economic downturn that lasted from 2009 to 2014. His government is struggling to tackle the influx of migrants from the Middle East and has pursued consumer-friendly policies to win back support.

Milanovic’s government has passed laws forgiving the debt of Croatia’s poorest people and allowing the conversion of loans based in Swiss francs to euros, which will relieve pressure on as many as 53,000 households hurt by strengthening in the Swiss currency and shove the brunt of costs on to lenders. The junk-rated nation’s biggest struggle remains its public finances, with the government estimating a budget deficit of 5 percent of output for this year and public debt seen at 92 percent of gross domestic product in 2016.

“Regardless of who ends up heading the new cabinet, at least a nominal tightening of fiscal policy is expected next year,” Otilia Dhand, senior vice president at Teneo Intelligence in London, said in an e-mail.

The Democratic Union, which has held power for 17 of the 25 years since the former Yugoslav republic’s first independent election in 1990, leads the Social Democrats 30 percent to 25 percent, according to an Ipsos Puls opinion poll published in September. The ruling party, which will contest the elections in an alliance with other parties, narrowed the gap as they prepared the Swiss franc-loan law, the poll showed.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE