Croatia: GDP growth gathers pace in Q2
The preliminary estimate reveals that GDP growth improved to 7.7% year on year (yoy) in the second quarter, from 7.0% in the first. The reading beat forecasts and was the second highest in the EU, after Slovenia.
Private consumption increased 7.7% in the second quarter, which was above the first quarter’s 6.3% expansion. Energy subsidies and a record-low unemployment rate in May–June supported household spending in the services sector, with notable improvements in catering, transport and retail. Meanwhile, fixed investment growth waned to 5.0% in Q2, from 7.9% in the prior quarter. Public spending also deteriorated, contracting 2.2% in Q2 (Q1: +5.9% yoy).
On the external front, exports of goods and services growth improved to 41.9% in Q2 (Q1: +29.4% yoy). Services contributed significantly to the reading, rising 65.7% yoy, as relaxed Covid-19 restrictions significantly boosted tourism. Similarly, imports of goods and services growth sped up to 28.6% in Q2 (Q1: +25.0% yoy).
On the outlook for the remainder of 2022, Alen Kovac, analyst at Erste Group Research, commented:
“[Strong] tourism results (7M22 at 95% of pre-covid levels), accompanied by solid domestic demand support, both on consumption and investment side, suggest Q3 growth should remain solid. […] Bottom line, we are comfortable with our current calls, at around 5% and 2% growth for 2022 and 2023 respectively, with today’s Q2 figure adding some upside risks to this year while risks for the latter are to the downside”.