Croatia Private consumption

Economic growth eases in the first quarter of 2026

GDP growth decelerates more than expected in Q1: Croatia's GDP expanded 2.2% in annual terms in Q1, following upwardly revised 3.9% growth in the previous quarter. Q1's reading was softer than the markets had anticipated and the weakest since Q4 2020. On a seasonally adjusted quarter-on-quarter basis, GDP was stable in Q1, following a 1.5% expansion in the previous quarter.

Fixed investment drags on growth: Relative to the previous period's data, figures in Q1 softened for government consumption (+0.7% on a year-on-year basis vs +2.8% in Q4), fixed investment (+2.5% vs +7.0% in Q4), exports of goods and services (-1.6% vs +1.5% in Q4) and imports of goods and services (-0.3% vs +0.3% in Q4). Finally, the variation in private consumption was the same as in the prior quarter (+2.6% in Q1 and Q4). Fixed investment growth moderated from the red-hot rates of prior quarters, weighed on by increased geopolitical uncertainty and a shrinking pool of labor. Still, domestic demand remained supportive overall, with private consumption growth not yet reflecting the broader impact of the Iran energy shock.

Panelist insight: Commenting on the outlook, Alen Kovac, analyst at Erste Bank, said: “In the context of the Middle East conflict and geopolitical uncertainties, somewhat underwhelming 1Q figures [have] added to the downside pressures. As far as domestic demand goes, private consumption is facing mounting headwinds, as rising inflation pressures, along with anticipated wage growth moderation, are set to bite into disposable income more aggressively in the remainder of the year. […] The external demand outlook remains blurry, with headwinds and volatility related to merchandise exports persisting. While services, namely tourism, face headwinds from weaker demand for travel, Croatia still enjoy a security premium in the current geopolitical landscape, thus providing some offsetting potential ahead of the crucial quarters for tourism.”

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