Croatia Economic Forecast

Croatia Economic Outlook

October 3, 2017

The economic expansion carried over into Q3, after accelerating in Q2. The tourism sector, which underpinned GDP growth in H1, continued its robust performance in July, translating into another month of remarkable retail sales increases. A record tourist season was also reflected in tighter labor market conditions; the unemployment rate is hovering at multi-year lows. Furthermore, the strong economy is having a positive impact on public accounts: The budget deficit was just 0.4% of projected GDP in H1 according to the Ministry of Finance. Because a significant decrease in income tax revenues—resulting from the tax reform that came into effect this year—was more than offset by higher corporate tax and VAT revenues, overall tax proceeds grew at a faster rate than total government expenditures. The positive fiscal and economic dynamics led S&P Global Ratings to improve Croatia’s outlook from stable to positive on 22 September, while maintaining its credit rating unchanged.

Croatia Economy Data

20122013201420152016
Population (million)4.34.34.24.24.2
GDP per capita (EUR)10,30910,33810,14610,46611,031
GDP (EUR bn)44.044.043.044.046.0
Economic Growth (GDP, annual variation in %)-2.2-1.1-0.52.22.9
Consumption (annual variation in %)-3.0-1.9-1.71.03.3
Investment (annual variation in %)-3.31.4-2.83.85.1
Industrial Production (annual variation in %)-5.4-1.61.22.45.1
Retail Sales (annual variation in %)-4.2-0.50.42.44.0
Unemployment Rate20.921.619.617.214.8
Fiscal Balance (% of GDP)-5.3-5.3-5.4-3.4-0.8
Public Debt (% of GDP)70.782.286.686.784.2
Money (annual variation in %)0.911.59.611.418.1
Inflation Rate (CPI, annual variation in %, eop)4.70.3-0.5-0.60.2
Inflation Rate (HICP, annual variation in %)3.42.30.2-0.3-0.6
Inflation (PPI, annual variation in %)5.4-0.2-2.5-3.7-4.3
Policy Interest Rate (%)7.007.007.003.003.00
Stock Market (annual variation in %)0.03.1-3.1-2.818.1
Exchange Rate (vs EUR)7.557.627.667.647.55
Exchange Rate (vs EUR, aop)7.517.587.637.617.53
Current Account (% of GDP)-0.31.01.94.62.7
Current Account Balance (EUR bn)0.00.40.92.11.2
Trade Balance (EUR billion)-6.6-6.9-6.8-7.0-7.4
Exports (EUR billion)9.69.610.411.512.3
Imports (EUR billion)16.216.517.118.519.7
Exports (annual variation in %)0.5-0.48.111.26.8
Imports (annual variation in %)-0.41.93.67.96.6
International Reserves (EUR)11.212.912.713.713.5
External Debt (% of GDP)13614313111395.5

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Croatia Facts

ValueChangeDate
Bond Yield2.560.71 %Oct 16
Exchange Rate6.360.21 %Oct 16
Stock Market1,855-0.40 %Oct 16

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Croatia Economic Growth

October 3, 2017

The economy should continue to grow at a healthy pace this year and next, buttressed by a growing tourism sector, solid household spending and increased EU funding. Nevertheless, some downside risks to the outlook remain, from multiple lawsuits associated with the Agrokor crisis and a possible tightening cycle by the ECB. Panelists project GDP will grow 2.9% in 2017 and 2.7% in 2018, up 0.1 percentage points from last month.

Croatia Economic News

  • Croatia: Industrial production growth speeds up in August

    October 2, 2017

    Industrial output in August increased 3.2% in working-day adjusted terms from the same month last year, following July’s softer 2.5% expansion. August’s result was driven by healthy expansions in the manufacturing and electricity, gas, steam, and air conditioning supply sub-sectors, although the mining and quarrying sub-sector continued to contract, albeit softly, in August. On a month-on-month basis, industrial production in August expanded 0.3% in seasonally- and working-day adjusted terms, contrasting July’s 1.1% decrease.

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  • Croatia: Inflation picks up in August

    September 15, 2017

    In August, consumer prices were flat from the previous month, following July’s 0.7% decrease.

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  • Croatia: Industrial production growth slows in July

    September 1, 2017

    Industrial output in July increased 2.5% in working-day adjusted terms from the same month last year, following June’s strong 4.0% expansion. July’s result was the lowest reading in three months.

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  • Croatia: Private consumption growth gives GDP a helping hand in Q2

    August 30, 2017

    The economy performed well in the second quarter of 2017, despite the crisis affecting Croatia’s largest company Agrokor, whose outstanding obligations currently stand close to 15% of the country’s GDP according to the European Bank for Reconstruction and Development.

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  • Croatia: Inflation inches up in July

    August 18, 2017

    In July, consumer prices fell 0.7% from the previous month, a sharper drop than June’s 0.5% decrease.

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