Croatia International Reserves (months of imports)

The economy likely shrank again in Q4 quarter on quarter, following a 0.4% contraction in Q3, while annual growth will have slowed. That said, economic data gives mixed signals. On one hand, both industrial output and retail trade weakened during October–December amid high inflationary pressures and softening momentum in the EU. More positively, consumer and business confidence recovered. Additionally, tourism arrivals were higher in year on year terms and the unemployment rate trended slightly downwards towards the end of the year. Turning to Q1 2023, the adoption of the euro should be boosting trade and investment, with investment also benefitting from the deployment of EU funds. That said, double-digit inflation will be keeping a lid on private spending.