Croatia: GDP growth slows considerably in Q4 on weaker fixed investment and exports
The economy lost considerable steam in the fourth quarter of 2017, restrained by a softer increase in exports and weaker fixed investment growth, which was likely held back by the restructuring of Croatia’s largest private company, food giant Agrokor. Year-on-year economic growth was 2.0% in Q4 (Q3 +3.3% year-on-year), according to preliminary estimates released by the Statistical Institute on 28 February. Q4’s result brought full-year growth for 2017 to 2.8%, below the 3.2% growth recorded in 2016.
Fixed investment expanded a meagre 1.7% in Q4, half of Q3’s 3.4% growth. The ongoing debt restructuring of Agrokor, with spillovers on the food giant’s providers and the banking system, likely discouraged investment decisions. However, private consumption grew a solid 3.4% in Q4 compared to the same quarter of the previous year (Q3: +3.7% yoy), again supported by strong tourist inflows and rising wages. Moreover, government consumption growth accelerated in annual terms to 2.6% in Q4 (Q3: +2.3% yoy).
On the external front, growth in exports of goods and services came in at 3.6% in Q4, a notable slowdown from Q3’s 5.7% increase. The moderation was mainly due to a deceleration in exports of goods growth. Growth in exports of services also slowed, despite the record-high tourist season, but to a lesser extent. Similarly, the rate of expansion of imports lost strength in Q4, coming in at 6.0% (Q3: +9.5% yoy), dragged down by softer growth in fixed investment.