Croatia Economic Forecast

Croatia Economic Outlook

January 14, 2020

The economy gained ground in the third quarter, driven by an improving external sector and resilient household spending. Exports of goods and services accelerated on stronger merchandise shipments, while a tighter labor market and solid wage gains lifted private consumption. Turning to Q4, economic momentum likely held up. The tourism sector started off on a stronger footing with arrivals rising robustly in October. That said, industrial production fell in October-November. On the political front, Zoran Milanovic from the Social Democrat party won Croatia’s presidential election on 5 January, ousting center-right incumbent Kolinda Grabar-Kitarovic. While the president typically has a limited role in matters of foreign policy and security, Milanovic will have a higher profile since Croatia took over the rotating presidency of the EU on 1 January.

Croatia Economic Growth

Economic growth is forecast to cool this year, particularly as the push from fixed investment weakens and the tourism sector faces stronger competition. Even so, growth should remain sturdy, buttressed by solid private consumption amid income tax cuts and public-sector wage hikes, and ongoing EU structural-funds absorption. A weaker Euro area remains a risk to the outlook. FocusEconomics panelists expect growth of 2.5% in 2020, which is up 0.1 percentage points from last month’s forecast, and 2.3% in 2021.

Croatia Economy Data

2014 2015 2016 2017 2018
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

Value Change Date
Bond Yield0.670.0 %Dec 31
Exchange Rate6.64-0.54 %Jan 01

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