Croatia Economic Forecast

Croatia Economic Outlook

September 3, 2019

Recently-released national accounts data revealed that the economy lost pace in the second quarter, albeit following an exceptionally robust first-quarter upturn. After logging the strongest expansion in over a decade in Q1, consumer spending softened amid slower wage growth and higher inflation in Q2. Similarly, fixed investment growth cooled, although remained strong nonetheless, while government expenditure picked up, cushioning the overall slowdown somewhat. Meanwhile, the external sector dragged on growth as exports waned amid a decline in merchandise shipments. Looking ahead, upbeat confidence in the services sector and improved sentiment in retail trade in July bode well for business activity at the start of Q3. In other news, the government announced a new round of tax cuts in late July aimed at young people as part of an effort to stem emigration. The measures are set to come into effect next year, which could provide a boost to disposable incomes.

Croatia Economic Growth

Growth is seen shifting into a higher gear this year, underpinned by firm domestic demand. Healthy real wage growth, a tightening job market and tax relief measures should spur consumer spending, while continued absorption of EU structural funds should buoy investment activity. A slowing EU economy and tourism industry amid increased competition weigh on the outlook. FocusEconomics analysts expect growth of 2.9% in 2019, which is down 0.1 percentage points 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)10,33610,25510,70611,22411,988
GDP (EUR bn)44.043.545.046.849.4
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)-5.3-5.1-3.2-1.00.8
Public Debt (% of GDP)80.484.083.780.577.8
Money (annual variation in %)11.59.611.418.219.1
Inflation Rate (CPI, annual variation in %, eop)0.3-0.5-0.60.21.2
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)0.91.84.62.63.7
Current Account Balance (EUR bn)0.40.92.11.21.7
Trade Balance (EUR billion)-6.6-6.5-7.0-7.4-8.3
Exports (EUR billion)8.99.410.210.511.7
Imports (EUR billion)15.516.017.217.920.0
Exports (annual variation in %)2.95.88.03.111.4
Imports (annual variation in %)3.62.87.64.211.6
International Reserves (EUR)12.912.713.713.515.7
External Debt (% of GDP)10510710188.981.8

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Croatia Facts

ValueChangeDate
Bond Yield0.620.0 %Sep 04
Exchange Rate6.71-0.54 %Sep 04
Stock Market1,869-0.48 %Sep 04

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