ZAGREB, May 31, 2018 - Finance Minister Zdravko Marić said on Wednesday that Croatia's current economic growth rates were good but that higher rates had to be aspired to in order to ensure job creation and higher living standards.
The national statistical office released its preliminary estimate according to 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 at a faster rate 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%.
"Following a long period of recession, the growth rates that we now have can definitely be described as good but Croatia must aspire to higher growth rates that will generate new employment and higher living standards," Marić told reporters in the parliament. He said that domestic demand, notably personal consumption, was again proving to be the chief generator of economic growth. "The positive effects of the tax reform and generally of consumer confidence are still visible," said Marić.
He pointed to the growth of investment for the 11th consecutive quarter. Gross investment in fixed capital grew in Q1 by 3.6% on the year, much faster than in the previous quarter, when it grew by 1.9%. "There is definitely more room for the growth of such investment, notably by the public sector," said the minister, adding that that was possible to achieve by improving the absorption of EU funds and greater investment by state-owned companies.
Commenting on a drop in exports of commodities and services, Marić said that this did not surprise him and that the matter required attention. Exports of commodities and services in Q1 dropped 0.5% from the same period of last year. Commodities exports dropped 1.5% while services exports grew 2.1%.
Asked for how long GDP growth could be based on household consumption, Marić said that household consumption could not be the only element of economic growth and that investments and exports were very important. "We have to strengthen the national economy and reduce its dependence on imports," said Marić and called for structural reforms.
