In the fourth quarter, GDP contracted 0.4% over the same quarter the year before, according to the second GDP estimate released by the Croatian Bureau of Statistics on 2 April. The print came in below the 0.2% drop reported in the 29 February flash estimate and contrasted the 0.7% rise recorded in the previous quarter. Meanwhile, the economy recorded flat growth in the full year 2011, contrasting 2010's 1.2% decline. The main cause behind the fourth quarter drop was a sharp deterioration in the external sector. Domestic demand improved noticeably, although remaining in the red for a third consecutive quarter (Q3: -4.2% year-on-year; Q4: -0.4% yoy). Private consumption grew 0.1% over the same period a year ago, mirroring the previous quarter's reading. Public spending dropped 1.3% (Q3: -0.4% yoy), due to government efforts to contain the fiscal deficit. Meanwhile, fixed investment improved slightly from an 8.4% drop in Q3 to a 6.1% fall in Q4. Moreover, GDP benefited from higher stockpiling, with contributed with 1.2 percentage points to overall economic growth. The external sector deteriorated sharply due to a significant decline in exports while imports also fell, albeit at a slower pace. Exports of goods and services contracted 3.5% over the same quarter the year before (Q3: +7.1% yoy), while imports dropped 3.0% (Q3: +0.1% yoy). As a result, the external sector's net contribution to overall economic growth fell from 3.8 percentage points in the third quarter to 0.2 percentage points in the fourth.
Economy contracts more than initially expected in fourth quarter
April 2, 2012
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