Croatia Economic Forecast

Croatia Economic Outlook

February 5, 2019

Available data paints a mixed picture for the economy in the final quarter of 2018, following solid growth in the third quarter that was mainly driven by upbeat domestic demand. On one hand, industrial production plummeted in December—the sixth monthly contraction in a row—on a sharp drop in manufacturing output, pointing to waning economic activity at year-end. On the other hand, retail sales accelerated in October and November which, coupled with improved consumer sentiment on average throughout the quarter, suggest that private consumption strengthened somewhat in Q4. Furthermore, buoyant growth of tourist arrivals in the first two months of the quarter—with the country on track to log another record tourist season in 2018—bode well for maintaining a strong external position for the year overall.

Croatia Economic Growth

Growth is expected to remain solid this year, underpinned by healthy domestic demand. Although private consumption is seen slowing, it should remain firm thanks to rising wages and employment. Capital spending, meanwhile, is set to accelerate on the back of increased absorption of EU structural funds and still-low financing costs. The external environment poses a key downside risk to the outlook as a slowdown in the Eurozone, Croatia’s main trading partner, and increased competition from other Mediterranean tourist destinations could dent export activity. FocusEconomics analysts expect growth of 2.7% in 2019, unchanged from last month’s forecast, and 2.5% in 2020.

Croatia Economy Data

20132014201520162017
Population (million)4.34.24.24.24.1
GDP per capita (EUR)10,33810,38210,70411,27111,810
GDP (EUR bn)44.044.045.047.049.0
Economic Growth (GDP, annual variation in %)-0.5-0.12.43.52.9
Consumption (annual variation in %)-1.9-1.61.03.43.6
Investment (annual variation in %)1.4-2.83.86.53.8
Industrial Production (annual variation in %)-1.71.22.55.01.9
Retail Sales (annual variation in %)-0.30.42.44.04.7
Unemployment Rate21.519.417.614.712.2
Fiscal Balance (% of GDP)-5.3-5.1-3.4-0.90.8
Public Debt (% of GDP)80.584.083.880.678.0
Money (annual variation in %)11.59.611.418.219.1
Inflation Rate (CPI, annual variation in %, eop)0.3-0.5-0.60.2-  
Inflation Rate (HICP, annual variation in %)2.30.2-0.3-0.61.3
Inflation (PPI, annual variation in %)-  -  -  -  -  
Policy Interest Rate (%)7.007.003.003.003.00
Stock Market (annual variation in %)3.1-3.1-2.818.1-7.6
Exchange Rate (vs EUR)7.627.667.647.557.43
Exchange Rate (vs EUR, aop)7.587.637.617.537.46
Current Account (% of GDP)0.91.84.42.64.4
Current Account Balance (EUR bn)0.40.92.01.21.9
Trade Balance (EUR billion)-6.6-6.5-7.0-7.3-8.2
Exports (EUR billion)8.99.410.210.511.7
Imports (EUR billion)15.516.017.217.919.8
Exports (annual variation in %)2.95.88.03.111.1
Imports (annual variation in %)3.62.87.64.011.1
International Reserves (EUR)12.912.713.713.515.7
External Debt (% of GDP)10510610188.682.6

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Croatia Facts

ValueChangeDate
Bond Yield2.050.0 %Feb 14
Exchange Rate6.55-0.54 %Feb 14
Stock Market1,751-0.48 %Feb 14

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