Croatia: Economy contracts more than initially expected in fourth quarter
April 2, 2012
In the fourth quarter, GDP contracted 0.4% over the same quarter the year before, according to the second GDP estimate released by the Croatian Bureau of Statistics on 2 April. The print came in below the 0.2% drop reported in the 29 February flash estimate and contrasted the 0.7% rise recorded in the previous quarter. Meanwhile, the economy recorded flat growth in the full year 2011, contrasting 2010's 1.2% decline. The main cause behind the fourth quarter drop was a sharp deterioration in the external sector. Domestic demand improved noticeably, although remaining in the red for a third consecutive quarter (Q3: -4.2% year-on-year; Q4: -0.4% yoy). Private consumption grew 0.1% over the same period a year ago, mirroring the previous quarter's reading. Public spending dropped 1.3% (Q3: -0.4% yoy), due to government efforts to contain the fiscal deficit. Meanwhile, fixed investment improved slightly from an 8.4% drop in Q3 to a 6.1% fall in Q4. Moreover, GDP benefited from higher stockpiling, with contributed with 1.2 percentage points to overall economic growth. The external sector deteriorated sharply due to a significant decline in exports while imports also fell, albeit at a slower pace. Exports of goods and services contracted 3.5% over the same quarter the year before (Q3: +7.1% yoy), while imports dropped 3.0% (Q3: +0.1% yoy). As a result, the external sector's net contribution to overall economic growth fell from 3.8 percentage points in the third quarter to 0.2 percentage points in the fourth.