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Croatia GDP Q1 2023

Croatia: Economy grows at softest pace since Q1 2021 in Q1

GDP growth fell to 2.8% year on year in the first quarter, from 3.5% in the fourth quarter of last year. Q1’s reading marked the softest growth since Q1 2021.

Looking at the components of demand, growth continued to be broad based. Private consumption increased 1.4% in the first quarter (Q4 2022: +1.3% yoy), supported by a resilient labor market and strong wage growth. Public consumption growth waned to 2.2% in Q1 (Q4 2022: +7.6% yoy). Additionally, despite being supported by the flow of European funds, fixed investment growth fell to 3.9% in Q1 (Q4 2022: +9.6% yoy), marking the worst reading since Q2 2022.

Exports of goods and services growth moderated to 4.8% in Q1 (Q4 2022: +14.2% yoy). In addition, imports of goods and services deteriorated, contracting 0.8% in Q1 (Q4 2022: +14.6% yoy), marking the worst performance in over two years. Overall, net exports contributed positively to GDP growth.

Looking at Q2, the economy is set to grow at a softer clip, dragged on by soft momentum in the industrial sector. Linked to this, muted growth in the Eurozone could weigh on goods exports. However, the strong labor market, the deployment of EU funds and strong tourism arrivals will be tailwinds.

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