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Croatia Economic Forecast

Croatia Economic Outlook

The economy is expected to have lost steam in Q2, primarily due to a strong statistical effect as a result of a high base of comparison. Despite this, underlying economic data paints a bright picture. In Q2, consumer sentiment improved, which, together with double-digit wage increases and lower unemployment, should have aided consumer spending, as indicated by year-on-year retail sales growth exceeding that of the previous quarter. Additionally, industrial production in Q2 rebounded from Q1’s contraction, and tourist arrivals boomed in annual terms. On the downside, tighter financing conditions and still-elevated inflation likely capped investment. Furthermore, weak demand from key trading partners, along with reduced labor cost competitiveness, likely put a lid on goods exports.

Croatia Inflation

Inflation fell to 7.4% in July, below June’s 7.6%, amid a moderation in price pressures for food and housing. Our panelists anticipate a decline in inflation from July levels later this year, attributed to the high base effect. Upside risks include persistent labor shortages, an unexpectedly robust tourist season and the prospect of price hikes for European gas.

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) 0.9 1.6 -0.3 1.0 -1.1
Current Account Balance (% of GDP) 1.8 2.9 -0.5 1.8 -1.6
Merchandise Trade Balance (EUR bn) -9.7 -10.5 -8.9 -11.4 -18.0
Merchandise Exports (EUR bn) 12.2 12.8 12.0 14.8 20.4
Merchandise Imports (EUR bn) 21.9 23.3 20.9 26.2 38.4
Merchandise Exports (ann. var. %) 4.4 5.1 -6.2 23.1 38.1
Merchandise Imports (ann. var. %) 8.5 6.6 -10.4 25.5 46.6
Foreign Direct Investment (EUR bn) 1.0 0.4 0.1 3.9 3.4

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