Croatia Economic Forecast

Croatia Economic Outlook

November 27, 2018

Monthly data indicates that the economy lost some steam in Q3, following solid growth in the previous quarter that was mainly driven by healthy domestic demand. After expanding modestly in Q2, the industrial sector contracted in Q3, largely owing to a drop in production of food and fabricated metal products. On the expenditure side, retail sales growth cooled in Q3 despite strong real wage increases and the tighter job market which saw the unemployment rate fall to its lowest in over two decades, pointing to somewhat weaker private consumption in the quarter. Meanwhile, available data sends mixed signals for Q4: In October, consumer sentiment deteriorated slightly from Q3’s average, while business confidence gained ground. On the fiscal front, in early November the government unveiled its 2019 budget, which projects higher revenues stemming mainly from economic growth and targets a small deficit of 0.4% of GDP.

Croatia Economic Growth

The economy is expected to maintain a solid pace of growth next year chiefly on the back of healthy household spending, which should be propped up by rising remittances, wages and employment. In addition, business investment is poised to benefit from sustained favorable financing conditions, while higher absorption of EU structural funds should power public investment. Downside risks to the outlook are largely external; particularly, a slowdown in Croatia’s main trading partners or increased competition from other tourist destinations in the Mediterranean could dampen export performance. FocusEconomics panelists project GDP growth of 2.7% in 2019, unchanged from last month’s forecast, and 2.5% in 2020.

Croatia Economy Data

Population (million)
GDP per capita (EUR)10,33810,38210,70411,27111,810
GDP (EUR bn)
Economic Growth (GDP, annual variation in %)-0.5-
Consumption (annual variation in %)-1.9-
Investment (annual variation in %)1.4-
Industrial Production (annual variation in %)-
Retail Sales (annual variation in %)-
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 %)-0.2-2.5-3.7-4.32.0
Policy Interest Rate (%)
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)
Current Account Balance (EUR bn)
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 %)
Imports (annual variation in %)
International Reserves (EUR)12.912.713.713.515.7
External Debt (% of GDP)10510610188.682.6

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Croatia Facts

Bond Yield2.130.0 %Dec 12
Exchange Rate6.49-0.54 %Dec 12
Stock Market1,716-0.48 %Dec 12

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