Small Croatian town on the beach

Croatia GDP Q2 2021

Croatia: GDP hits record growth rate in Q2 on low base effect

GDP bounced back solidly in the second quarter, expanding 16.1% in annual terms, contrasting Q1’s 0.7% slide. Q2’s reading logged the highest growth rate on record but was flattered by a low base effect.

The upturn came on the back of a broad-based improvement in activity. Household spending rebounded in the quarter, expanding 18.4% year-on-year and putting an end to a four-quarter streak of contractions (Q1: -0.4% yoy). Moreover, fixed investment growth accelerated to 18.3%, markedly above the 4.6% rise tallied in the prior quarter, while government consumption gained pace, hitting an over one-year high (Q2: +4.0% yoy; Q1: +0.2% yoy).

On the external front, exports of goods and services expanded a robust 40.9% in annual terms in Q2, swinging from the previous quarter’s 0.9% dip, likely supported by rising numbers of tourist arrivals, which should have boosted the crucial hospitality sector. Similarly, imports of goods and services rebounded, growing at a double-digit rate of 30.3% (Q1: -2.1% yoy).

This year, the economy is expected to grow healthily in line with firming domestic and foreign demand. Moreover, incoming EU funds should provide an additional boost. However, much depends on the evolution of the Delta variant outbreak in the region. Unlike most Mediterranean competitors, Croatia has managed to maintain new Covid-19 infections at relatively low levels this summer, likely increasing its attractiveness as a travel destination. Aside from a positive impact on the external sector, this also lowers the likelihood of stricter curbs following the end of tourism season. However, with less than half of the population fully vaccinated, pandemic-related uncertainty still clouds the outlook.

Free sample report

Access essential information in the shortest time possible. FocusEconomics provide hundreds of consensus forecast reports from the most reputable economic research authorities in the world.
Close Left Media Arrows Left Media Circles Right Media Arrows Right Media Circles Arrow Quote Wave Address Email Telephone Man in front of screen with line chart Document with bar chart and magnifying glass Application window with bar chart Target with arrow Line Chart Stopwatch Globe with arrows Document with bar chart in front of screen Bar chart with magnifying glass and dollar sign Lightbulb Document with bookmark Laptop with download icon Calendar Icon Nav Menu Arrow Arrow Right Long Icon Arrow Right Icon Chevron Right Icon Chevron Left Icon Briefcase Icon Linkedin In Icon Full Linkedin Icon Filter Facebook Linkedin Twitter Pinterest X Download Fullscreen