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Croatia Economic Forecast

Croatia Economic Outlook

Year-on-year economic growth ticked down to 2.7% in Q2 from 2.8% in Q1. Fixed investment lost steam due to weaker construction activity, likely dragged down by higher interest rates. Moreover, exports swung into contraction amid soft external demand. On the flip side, private consumption growth picked up on the back of lower inflation and unemployment. Turning to Q3, available data suggests that underlying momentum is fading. In July, the unemployment rate rose, while industrial output fell in both annual and monthly terms. Moreover, economic sentiment averaged lower in July–August relative to Q2’s level amid reduced optimism in the industrial and services sectors. Against this backdrop, our panelists are penciling in a sequential contraction for Q3. That said, they see annual growth remaining healthy thanks to a more favorable base of comparison.

Croatia Inflation

Inflation ticked up to 7.7% in August from July’s 7.4%. The increase was chiefly driven by a rebound in transportation inflation. Our panelists see inflation falling during the remainder of the year thanks to a high base effect and elevated interest rates. A persistent labor shortage is a factor to watch, while higher energy prices are an upside risk.

This chart displays Economic Growth (GDP, annual variation in %) for Croatia from 2013 to 2022.

Croatia Economic Data

2018 2019 2020 2021 2022
ECB Overnight Deposit Rate (%, eop) -0.40 -0.50 -0.50 -0.50 2.00
3-Month EURIBOR (%, eop) -0.31 -0.38 -0.55 -0.57 2.13
Exchange Rate (USD per EUR, eop) 1.14 1.12 1.22 1.14 1.07
Exchange Rate (USD per EUR, aop) 1.18 1.12 1.14 1.18 1.05
Population (million) 4.1 4.1 4.0 3.9 3.9
GDP (USD bn) 61.3 61.3 57.5 68.9 70.4
GDP per capita (USD) 14,989 15,085 14,215 17,750 18,257
GDP (EUR bn) 51.9 54.8 50.5 58.2 66.9
GDP per capita (EUR) 12,704 13,477 12,470 15,015 17,370
Economic Growth (Nominal GDP, ann. var. %) 4.9 5.5 -7.9 15.4 14.9
Economic Growth (GDP, ann. var. %) 2.8 3.4 -8.5 13.1 6.2
Domestic Demand (ann. var. %) 3.2 4.8 -3.1 7.3 4.8
Private Consumption (ann. var. %) 3.3 4.0 -5.1 9.9 5.2
Government Consumption (ann. var. %) 2.3 3.1 4.3 3.0 3.2
Fixed Investment (ann. var. %) 3.9 9.0 -5.0 4.7 5.8
Exports (G&S, ann. var. %) 3.7 6.8 -23.3 36.4 25.4
Imports (G&S, ann. var. %) 7.5 6.6 -12.4 17.6 25.0
Industrial Production (ann. var. %) -0.8 0.6 -3.4 6.4 1.6
Retail Sales (ann. var. %) 4.0 3.6 -5.6 11.7 2.0
Wages (ann. var. %) 4.8 4.8 6.7 4.0 8.3
Unemployment (% of active population, aop) 8.4 6.7 7.7 7.6 6.9
Fiscal Balance (% of GDP) -0.1 0.2 -7.3 -2.5 0.4
Public Debt (% of GDP) 73.2 71.0 87.0 78.4 68.4
Inflation (CPI, ann. var. %, eop) 0.9 1.4 -0.7 5.5 13.1
Inflation (CPI, ann. var. %, aop) 1.5 0.8 0.2 2.6 10.8
Inflation (HICP, ann. var. %, eop) 1.0 1.3 -0.3 5.2 12.7
Inflation (HICP, ann. var. %, aop) 1.6 0.8 0.0 2.7 10.7
Inflation (PPI, ann. var. %, aop) 0.0 0.7 -2.6 5.2 26.3
CNB Discount Rate (%, eop) 0.00 0.00 0.00 0.00 2.50
Stock Market (ann. var. of CROBEX %) -5.1 15.4 -13.8 19.6 -4.8
Current Account Balance (EUR bn) 0.8 1.4 -0.5 0.6 -1.9
Current Account Balance (% of GDP) 1.6 2.5 -1.0 1.0 -2.8
Merchandise Trade Balance (EUR bn) -9.7 -10.5 -8.8 -11.4 -18.1
Merchandise Exports (EUR bn) 12.2 12.8 12.0 14.8 20.6
Merchandise Imports (EUR bn) 21.9 23.3 20.9 26.2 38.7
Merchandise Exports (ann. var. %) 4.4 5.1 -6.2 23.1 38.9
Merchandise Imports (ann. var. %) 8.5 6.6 -10.4 25.5 47.6
Foreign Direct Investment (EUR bn) 1.0 0.4 0.1 3.9 3.4

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