By Zoran Radosavljevic
ZAGREB (Reuters) - Ivo Josipovic faces a tight run-off next month to try to win a second five-year term as Croatia's president after failing to secure a majority from voters frustrated by the country's economic malaise.
With 98 percent of Sunday's ballot papers counted in the European Union's newest member, Josipovic was on top with 38.5 percent, followed closely by Kolinda Grabar-Kitarovic from the HDZ, the main conservative opposition, on 37 percent.
Josipovic is supported by the ruling Social Democrats (SDP), whose popularity has plunged since they took power in 2011 because of the government's failure to halt six years of recession.
The former Yugoslav republic, which joined the EU in July last year, is enduring unemployment running at 19 percent and no economic growth is expected in 2015. It remains stifled by high taxes and inefficient administration.
"I still think Josipovic can win in the second round, if his team puts more hard work in the campaign, though it will be tighter than I thought," said Zeljko Trkanjec, a political analyst and editor at Jutarnji List daily.
"Given that the HDZ is very likely to win the parliamentary election (in late 2015), Josipovic would probably be a better choice, as some kind of a counterpoint to the HDZ," he said.
Josipovic is a jurist and composer of classical music who won his first term on an anti-corruption ticket, but has kept a relatively low profile as the country grappled with its worst economic crisis since becoming independent in 1991.
Grabar-Kitarovic is a former foreign minister, ambassador to Washington and NATO official.
The president, elected for a five-year term, has a say in foreign policy, defense and intelligence, but has no power to veto laws. The run-off is due on Jan. 11.
(Editing by Alison Williams)