Croatia GDP Q2 2022

Croatia

Croatia: GDP growth gathers pace in Q2

August 26, 2022

The preliminary estimate reveals that GDP growth improved to 7.7% year on year (yoy) in the second quarter, from 7.0% in the first. The reading beat forecasts and was the second highest in the EU, after Slovenia.

Private consumption increased 7.7% in the second quarter, which was above the first quarter's 6.3% expansion. Energy subsidies and a record-low unemployment rate in May–June supported household spending in the services sector, with notable improvements in catering, transport and retail. Meanwhile, fixed investment growth waned to 5.0% in Q2, from 7.9% in the prior quarter. Public spending also deteriorated, contracting 2.2% in Q2 (Q1: +5.9% yoy).

On the external front, exports of goods and services growth improved to 41.9% in Q2 (Q1: +29.4% yoy). Services contributed significantly to the reading, rising 65.7% yoy, as relaxed Covid-19 restrictions significantly boosted tourism. Similarly, imports of goods and services growth sped up to 28.6% in Q2 (Q1: +25.0% yoy).

On the outlook for the remainder of 2022, Alen Kovac, analyst at Erste Group Research, commented:

“[Strong] tourism results (7M22 at 95% of pre-covid levels), accompanied by solid domestic demand support, both on consumption and investment side, suggest Q3 growth should remain solid. […] Bottom line, we are comfortable with our current calls, at around 5% and 2% growth for 2022 and 2023 respectively, with today’s Q2 figure adding some upside risks to this year while risks for the latter are to the downside”.

FocusEconomics panelists forecast GDP to expand 4.5% in 2022, which is down 0.1 percentage points from last month’s estimate. For 2023, our panel sees GDP growth at 3.8%.


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