ZAGREB, February 28, 2020 - Croatia's economy grew by 2.5% in the fourth quarter of 2019 compared to Q4 2018, which is a lower rate than in Q3, when economic growth was at 2.9%.

The national statistical office (DZS) on Friday published its preliminary estimate, which shows that GDP saw an annual increase of 2.5% in Q4 2019, the 22nd consecutive quarter to see an increase in GDP albeit lower than in the previous quarter.

In 2019 GDP grew by 2.9%, which is more than the year before, when the growth rate was 2.65%.

The faster GDP growth in 2019 was mostly owing to a strong, 4.1% increase in the first quarter, while in the second quarter GDP grew 2.4% and in the third it rose 2.9% on the year.

The biggest positive contribution to GDP growth in Q4 2019 came from an increase in the export of goods and services and household consumption, the DZS says.

On the other hand, the contribution of net external demand was negative.

Household consumption in Q4 grew by 4% compared to the same period of the year before, which is a faster growth than in Q3, when household consumption grew by 3.1%.

The export of goods and services grew in Q4 by 5.6% on the year, which is higher than the 5.1% growth recorded in the previous quarter.

The export of goods grew by 2.1% and the export of services jumped by 12.1%.

The import of goods and services rose by 0.1% on the year, much less than in the previous quarter, when it rose by 4.3%.

The import of goods rose by 0.8% while the import of services dropped by 3.1%.

In Q4, investments in fixed assets rose by 4% on the year, which is a decrease compared to a 5% increase in the previous quarter.

Government spending also grew in Q4, by 3.5% on the year, which is faster than in Q3, when government spending grew at a rate of 2.9%.

According to seasonally adjusted data, GDP in Q4 grew by 0.3% compared to the previous quarter while on the year it grew by 2.7%.

The GDP growth rate is higher than the EU average considering that Eurostat recently said that the EU economy in Q4 2019 grew by 1.2% on the year and by 0.1% on the quarter.

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ZAGREB, February 24, 2020 - Croatia's Gross Domestic Product (GDP) reached €11,893 per capita in 2017, with only the City of Zagreb and three coastal counties surpassing the national average, data from the National Bureau of Statistics shows.

Zagreb's GDP per capita was three times as high as that of Virovitica-Podravina County, which was the lowest.

Expressed in the national currency, the kuna, Gross Domestic Product per capita in 2017 amounted to 88,726 kuna, which is a nominal growth rate of 5.4% compared with 2016, while the growth rate in euro is 6.4%.

Statistics also show that Croatia's Gross Domestic Product per capita was 61.7% of the EU28 average.

The highest GDP per capita in 2017 was recorded in the City of Zagreb, reaching €20,850, which is 75.3% above the national average. Zagreb was also the only administrative unit in Croatia which had a Gross Domestic Product per capita higher than the EU28 average, namely 8.2% above the average.

Only three other counties, notably those on the Adriatic coast, had a GDP above the Croatian average. Istria County's GDP per capita was €14,866, 25% above the national average, Primorje-Gorski Kotar County had a Gross Domestic Product per capita of €14,526, 22.1% above the national average, while Dubrovnik-Neretva County surpassed the national average by 5.7% with a Gross Domestic Product per capita of €12,575.

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ZAGREB, February 13, 2020 - The European Commission on Thursday stated that Croatia's real GDP growth "is estimated to have risen to 3.0% in 2019", as against the previous forecasts of 2.9%, assessing that in 2020, the economy will grow at a rate of 2.6% and in 2021 at 2.3%.

"After a weak 2018, real GDP growth in Croatia is estimated to have risen to 3.0% in 2019," the EC says in its latest Winter 2020 Economic Forecast.

"Domestic demand strengthened, driven by a noticeable pick-up in investment and government consumption expenditure, while continued improvements in the labour market and low inflation underpinned private consumption," reads the report issued on Thursday.

"Even though exports rebounded sharply, their growth was outpaced by imports.

"Economic growth is expected to moderate as GDP is forecast to expand by 2.6% and 2.3% in 2020 and 2021, respectively," reads the latest report and while the previous economic forecast by the EC, issued on 7 November 2019, estimated that Croatia's economy is likely to expand at the same rate of 2.6% in 2020 and at the rate of 2.4% in 2021.

The EC expects domestic demand to remain the main driver of growth in both years.

"Household consumption growth is expected to inch down but remain supported by rising real disposable incomes as unemployment, already at record low levels, is expected to further decline," says the EC.

"Investment growth is expected to remain strong, supported by a growing volume of maturing EU-funded projects from the 2014-2020 programming period.

"Export growth is set to moderate, in line with lower growth in Croatia’s main trading partners, trade uncertainties and the limited scope for further growth in the tourism sector. Import growth should be underpinned by still strong domestic demand but is Expected to decline in both 2020 and 2021.

"After improving in 2019, the contribution of net exports to growth is expected to deteriorate in 2020 before stabilising in 2021,” reads the Croatia report from the latest Economic Forecast.

"The HICP inflation rate halved in 2019 compared to 2018, due to negative inflation for unprocessed food price, resulting from changes in the applicable VAT rate. With the VAT change effect dissipating, wage pressures in the labour market and strong domestic demand are expected to fuel a pick-up in inflation in both 2020 and 2021, despite the assumed decline in energy prices Core inflation is thus expected to increase even more. Inflation is forecast at 1.5% and 1.7% in 2020 and 2021 respectively," the EC concluded.

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ZAGREB, February 13, 2020 - The available monthly indicators suggest that Croatia's real GDP growth slowed in the fourth quarter of 2019, while the labour market continued to see favourable trends, including increased employment and wages and a fall in unemployment, the Croatian National Bank (HNB) Council said a statement on Wednesday.

The HNB Council met to discuss the latest monetary and economic trends and analyse the financial stability of the banking system in the last quarter of 2019.

Inflation picked up from 0.7% in November to 1.4% in December, mostly due to food prices, notably a strong increase in pork prices, and oil prices.

Financing costs mainly continued to decrease as a result of the accommodative monetary policy.

The annual rise in bank loans accelerated to 4.2% at the end of 2019 on the back of the rise in household and corporate loans. At the same time, the annual rise in loans to non-financial companies was mostly due to the fading of the negative effect of the activation of state guarantees for shipyards in late 2018.

The available fiscal data for the third quarter of 2019 indicate a continuation of favourable trends in public finance as budget revenues grew faster than expenditures, the statement said.

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ZAGREB, January 9, 2020 - According to the latest World Bank estimates, Croatia's growth in 2019 and 2020 is forecast to pick up to 2.9% and 2.6% respectively, which means that the difference from previous estimates is respective 0.4 and 0.1 percentage points.

The World Bank's Global Economic Prospects, issued on Wednesday. reads that in 2021, Croatia's economy is likely to slow to 2.4%, and this forecast is the same as in the previous report issued in June 2019. Croatia's economy is set to grow at the rate of 2.4% also in 2022.

The latest report reads that the growth in emerging economies in Europe and Central Asia, the region where Croatia is also added in the report, "is expected to firm over the forecast horizon, to 2.6 percent in 2020 and 2.9 percent in 2021-22, on the assumptions that key commodity prices and growth in the Euro Area stabilize, and that Turkey’s economy recovers from earlier financial pressures and Russia firms on the back of policy support."

Considerable variation across economies is expected to continue. "Economies in Central Europe are anticipated to slow as fiscal policy support wanes and demographic pressures persist, while those in Central Asia are projected to continue growing at a robust pace, and more rapidly than previously envisaged, on the back of structural reform progress."

Central Europe is forecast to sharply decelerate over the forecast horizon, to 3.4 percent GDP growth in 2020 and 3 percent by 2022.

Growth in the Central Europe is "highly dependent on the continued absorption of EU structural funds, with the current cycle expected to end in 2020."

"The regional outlook remains subject to significant downside risks, including slowing growth in major trading partners, geopolitical turbulence, heightened policy uncertainty, exposure to disorderly financial market developments, as well as weakening productivity growth over the long run."

Global growth set to pick up modestly to 2.5% in 2020 amid mounting debt and slowing productivity growth

Global economic growth is forecast to edge up to 2.5% in 2020 as investment and trade gradually recover from last year’s significant weakness but downward risks persist, the World Bank says in its January 2020 Global Economic Prospects.

"Growth among advanced economies as a group is anticipated to slip to 1.4% in 2020 in part due to continued softness in manufacturing.

"Growth in emerging market and developing economies is expected to accelerate this year to 4.1%. This rebound is not broad-based; instead, it assumes improved performance of a small group of large economies, some of which are emerging from a period of substantial weakness. About a third of emerging market and developing economies are projected to decelerate this year due to weaker-than-expected exports and investment.

"With growth in emerging and developing economies likely to remain slow, policymakers should seize the opportunity to undertake structural reforms that boost broad-based growth, which is essential to poverty reduction," World Bank Group Vice President for Equitable Growth, Finance and Institutions, Ceyla Pazarbasioglu, was quoted as saying.

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ZAGREB, December 21, 2019 - Erste Bank estimates that Croatia's GDP growth in 2020 will slow down to 2.5% compared to the 3% forecast for this year, it was said on Friday during a Christmas function for the bank's executives and the media.

Chief analyst at Erste Bank Alen Kovač said that personal consumption and investments were the main generators of growth in 2019 and that investments were supported by better absorption of European Union funds. Kovac expects that these two segments will once again be the main contributors to growth in 2020 and that a relatively strong growth in investments, once again supported by EU funds, would compensate for the potentially unfavourable economic situation abroad next year, which could mean negative risks for Croatian exports.

Those risks are primarily related to Brexit, the potential further deterioration of trade relations between the major powers, and the level of growth in Germany and Italy. Personal consumption and its contribution should remain relatively stable and strong, and that should be supported by positive aspects in the area of disposable income, consumer confidence, the labour market and increased wages in the public sector, Kovač said.

Risks related to the estimated growth rate of 2.5% in 2020 are relatively balanced and investments represent a positive risk, while the global surroundings are a negative risk," Kovač underlined.

He added that growth climaxed in central and eastern Europe in 2018 while it slowed down in the majority of countries in 2019. Croatia is among that group of countries where a mild acceleration occurred, which is a positive exception.

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ZAGREB, December 19, 2019 - Croatia's economic growth is expected to slow down to 2.5% in 2020, from the medium forecast of GDP growth 2.9% in 2019, a survey conducted by the Croatian Banking Association (HUB) showed on Thursday.

The expected slowdown is due to external factors and internal weaknesses, such as the lack of reforms, investment barriers, an inefficient state sector and unfavourable demographics, members of the HUB Club of Chief Economists said in the survey.

Kuna exchange rates are expected to remain the same as in late 2019, while public debt should continue decreasing approximately at the same rate as this year. Interest rates are expected to remain low.

Projections by the chief economists of four leading Croatian banks are in line with those of the International Monetary Fund and the European Commission. The IMF expects the Croatian economy to rise by 3% in 2019 and by 2.7% in 2020, while the EC has forecast Croatia's growth at 2.9% in 2019 and 2.6% in 2020.

Those interviewed projected the public debt to GDP ratio at 72% this year, down from 74% in 2018, but slightly higher than the government's forecast of 71%, HUB said.

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ZAGREB, December 16, 2019 - Croatia's economy is expected to grow by 3% in 2019 and slow down to 2.8% in 2020, while favourable labour market trends are expected to continue, the Croatian National Bank (HNB) said on Monday.

Inflation is projected at 0.8% in 2019, due to a reduction of VAT on certain products and a fall in oil prices, while in 2020 it is expected to pick up to 1.4% as a result of increased food prices and higher excise taxes.

The HNB forecasts a higher current account and capital account surplus than last year, thanks to increased exports, stronger absorption of EU funds and a rise in revenues from remittances, while next year a lower surplus is expected.

Foreign debt indicators should continue to improve in 2020.

In such a macroeconomic environment the HNB intends to continue an expansionary monetary policy, supporting the high liquidity of the monetary system, while at the same time keeping the nominal kuna-euro exchange rate stable.

After running a surplus in 2018, the general government budget is expected to show a deficit of 0.1% of GDP in 2019 and a surplus of 0.2% in 2020. General government debt is likely to continue to shrink in accordance with fiscal rules, the HNB said.

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ZAGREB, November 27, 2019 - In the third quarter of 2019, the Croatian economy grew by 2.9% on the year, a somewhat faster growth compared to the second quarter when GDP increased by 2.4%. The Croatian Bureau of Statistics (DZS) on Wednesday released its initial estimate according to which Gross Domestic Product (GDP) in the third quarter increased by 2.9% on the year.

That is the 21st quarter in a row that Croatia's GDP has grown.

The biggest positive contribution to GDP in Q3 came from a growth in the export of commodities and services, and household consumption, DZS reported.

Household consumption increased 3.3% in Q3 year-on-year and 2.7% compared to the second quarter.

The export of commodities and services increased by 4.7% in Q3, Y-o-Y and by 3.3% Q-o-Q. The export of commodities jumped by 7.1% while services exports increased 3.1%.

The import of commodities and services also increased on the year (+1.1%), significantly slower than in the preceding quarter when it jumped by 8.3%. The import of commodities increased by 0.9% while imported services increased by 1.8%.

The growth of gross investments in fixed capital increased by 5% in Q3 on the year, which was slower than in Q2 when it increased by 8.2%.

Government consumption also increased in Q3 (+2.9%) compared to the same quarter last year, which is a slower growth than in the second quarter (+3.9%).

In Q3 2019, according to seasonally adjusted data, Croatia's GDP grew by 0.8% from Q2 and 2.8% from Q3 2018.

That is a higher growth than the EU average. Recently, the Eurostat statistical office reported that the EU economy grew by 1.3% in Q3 on the year and 0.3% on the quarter.

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ZAGREB, November 14, 2019 - Croatia's real GDP growth picked up in the third quarter of 2019, the Croatian National Bank (HNB) said in a statement from a meeting of the HNB Council on Thursday.

The HNB Council discussed a report on the latest economic and monetary trends and adopted a semi-annual report on the financial situation, the degree of price stability and the implementation of monetary policy in the first half of 2019.

According to available monthly indicators, real GDP growth accelerated in the third quarter of 2019. Following stagnation in the second quarter, unemployment continued to decrease, while employment growth slowed. In the third quarter, nominal wage growth picked up slightly, with wages in the public and private sectors increasing, the central bank said.

The annual consumer price inflation rate in September remained at August's level, at 0.8%.

Financing costs mainly continued to decrease, also thanks to the accommodative monetary policy stance. The annual rise in bank lending slowed to 3% at the end of September as a result of a decrease in corporate lending.

In the second quarter of 2019, the general government budget ran a surplus of slightly under 2.5 billion kuna, an increase of 200 million kuna compared with the same period in 2018. The strong revenue growth, backed by the favourable effect of growth in personal consumption and imports as as well as the greater use of EU funding, was offset by roughly equal growth in expenditure, the HNB said.

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