Croatia GDP Q1 2020

Croatia

Croatia: Economy grows at softest pace in over five years in Q1 on initial Covid-19 effect

May 29, 2020

Economic activity moderated in the first quarter on the initial impact from the Covid-19 pandemic, with GDP increasing just 0.4% on an annual basis (Q4 2019: +2.5% year-on-year), marking the worst reading since Q3 2014.

Household spending growth fell to 0.7% in Q1 (Q4 2019: +4.0% yoy), a four-and-a-half year low, due to the confinement measures enacted to curb the spread of the pandemic. In addition, fixed investment growth slowed to 3.1% in Q1 from 4.0% in the previous quarter. However, public spending grew at the fastest pace in over a decade, expanding 4.8% (Q4 2019: +3.5% yoy)—cushioning the overall slowdown.

Exports of goods and services contracted 3.0% in Q1, marking the worst result since Q2 2012 (Q4 2019: +5.6% yoy). In addition, imports of goods and services dropped 5.8% in Q1 (Q4 2019: +0.1% yoy). Taken together, the external sector made a positive contribution to overall growth in Q1, as was the case in the prior quarter.

GDP is set to record the largest contraction since 2009 this year, as the Covid-19 outbreak ravages the important tourism sector. The pandemic will also depress export demand, particularly from key partner Italy, while government finances are seen deteriorating notably this year.

FocusEconomics panelists forecast GDP to decline 7.9% in 2020, which is unchanged from last month’s estimate, and grow 4.4% in 2021.


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Croatia GDP Q1  20 20

Note: Year-on-year changes of GDP in %.
Source: Croatian Bureau of Statistics (CBS) and FocusEconomics Consensus Forecast.


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