ZAGREB, May 30, 2018 - In the first three months of this year, the Croatian economy grew 2.5% on the year, faster than in the previous quarter and more than expected, with household consumption having contributed the most to GDP growth.
The national statistical office today released its preliminary estimate under which GDP in Q1 grew 2.5% from the same period of last year.
Q1 2018 was the 15th consecutive quarter to see GDP grow and faster than in the previous quarter, when the economy grew 2% on the year, the slowest growth rate since mid-2015.
The Q1 growth is higher than expected. Eight economic analysts polled by Hina had predicted an average growth rate of 2.3%, with their estimates ranging from 1.3% to 2.5%.
The biggest positive contribution to GDP growth in Q1 came from household consumption. The contribution of domestic demand was positive while the contribution of net foreign demand was negative.
According to seasonally adjusted data, GDP in Q1 grew 0.2% from the previous quarter while in relation to the first quarter of 2017, it grew 1.5%.
Economic analysts warn of weaknesses and the fact that the national economy is growing at a rate below the EU average. "After several years of positive trends, GDP growth is no longer surprising. But the 2.5% growth rate indicates certain weaknesses of the domestic economy. Firstly, GDP growth structure shows that growth is again based predominantly on personal consumption and secondly, even though investments in capital have grown again, that growth is still insufficient," said Zdeslav Šantić, the chief economic analyst at Splitska Banka.
Šantić said that it was worrying that, after a long period of time, Croatia was again recording a decrease in commodity exports which not even a mild increase in the export of services could cushion.
According to the latest statistics, the export of commodities and services in Q1 was 0.5% down from the year before. Commodity exports dropped by 1.5% while the export of services grew by 2.1%. On the other hand, the import of commodities and services grew by 5.5% compared to the same period of last year, with the import of commodities going up 4.5% and the import of services by 11.2%.
"It should be said that the 2.5% growth is definitely weaker than the growth rates of other EU countries in our neighbourhood and it shows that we still lag behind in the process of convergence," said Šantić, noting that the Hungarian economy in Q1 grew at a rate of 4.7% while Poland's GDP grew 4.9%.
Šantić said that the big difference between the original and seasonally adjusted data on GDP was due to seasonal effects – a slightly earlier Easter and the fact that a part of car sales were shifted from the end of last year to the beginning of this, which has significantly affected economic trends.
"If we look closer at the data, we have reason for concern," Šantić said, adding that his estimate of economic growth for the entire year remained at 2.4%, less than last year's growth rate of 2.8%.
In the latest statistical report earlier data have been revised, and the Q4 GDP growth rate has been revised upwards from 2% to 2.2%.
