Croatia: Private consumption growth gives GDP a helping hand in Q2
August 30, 2017
The economy performed well in the second quarter of 2017, despite the crisis affecting Croatia’s largest company Agrokor, whose outstanding obligations currently stand close to 15% of the country’s GDP according to the European Bank for Reconstruction and Development. Year-on-year economic growth was recorded at 2.8% in Q2 (Q1: +2.5% year-on-year), according to preliminary statistics released by the Statistical Institute.
Private consumption grew 3.8% in Q2 compared to the same quarter of the previous year (Q1: +3.5% yoy) and was underpinned by strong tourism activity and a tightening labor market which has encouraged wage growth. Government consumption was more lackluster by comparison, which has been the case since Q1 2015, although it still recorded an annual expansion of 1.7% in Q2 (Q1: +1.6% yoy). Meanwhile, fixed investment cooled, recording a growth rate of 3.2% in Q2 compared to 5.4% in Q1.
On the external front, growth in exports of goods and services came in at 3.6% in Q2 compared to the same quarter of the previous year, a slowdown compared to Q1’s 8.6% expansion and a four-year low. Q2’s slowdown was due to a sharp deceleration in the growth of exports in goods, while growth in exports of services increased because of healthy tourism activity. The rate of expansion of imports also decelerated in Q2, coming in at 4.6% (Q1: +10.1% yoy).
Author: Edward Gardner, Economist