Croatia: Stronger fixed investment and solid household spending underpin growth in Q3
December 1, 2017
The economy gained traction in the third quarter of 2017, supported by a surge in fixed investment and solid household spending, despite the uncertainty still surrounding the restructuring of Croatia’s largest private company, food giant Agrokor. Year-on-year economic growth was recorded at 3.3% in Q3 (Q2: +3.0% year-on-year), according to preliminary estimates released by the Statistical Institute on 1 December.
Fixed investment expanded 3.4% in Q3, just above Q2’s 3.3% growth. It was supported by increased disbursements of EU investment funds and loose financing conditions. Private consumption grew 3.7% in Q3 compared to the same quarter of the previous year (Q2: +3.7% yoy), driven by a record-breaking tourist season and tight labor market conditions. Government consumption also accelerated to an annual growth rate of 2.3% in Q3 (Q2: +1.7% yoy).
On the external front, growth in exports of goods and services came in at 5.7% in Q3 compared to the same quarter of the previous year, a slowdown compared to 6.5% growth in Q2. The moderation was due to a notable deceleration in exports of services growth, despite the record-high tourist season. On the other hand, growth in exports of goods accelerated significantly, which was reflected in robust industrial production throughout the quarter and attributable to healthy demand from major trading partners. On the other hand, the rate of expansion of imports gained notable strength in Q3, coming in at 9.5% (Q2: +5.8% yoy), on the back of expanding investment.