October 18, 2022 - The Council of the Croatian National Bank (HNB) stated on Tuesday that indicators point to a slowdown in economic growth in the third quarter of this year and next year.

The economic statistical indicators indicate the possibility of a decrease in economic activity in the third quarter of 2022 compared to the previous quarter, i.e. a strong slowdown in real growth compared to the same quarter last year, according to the press release from the HNB Council session. They note that business and consumer expectations worsened, industrial production decreased in July and August compared to the second quarter, and turnover from retail trade stagnated. The employment growth slowed down, yet the administrative unemployment rate in July and August was slightly lower than in the three previous months. In the mentioned two months, the growth of nominal gross wages also slowed down, while real wages continued to decrease, the HNB states, adding that on the other hand, indicators in tourism point to record achievements in the third quarter.

In an environment of significant worsening of economic prospects accompanied by strong inflationary pressures and uncertainty regarding the prices and availability of energy sources, economic growth could slow down from the expected 5.5 percent this year to one percent next year, the HNB estimates. The annual inflation measured by the consumer price index accelerated to 12.8 percent in September, from 12.3 percent in August, the statement further states, but also adds that towards the end of the year, inflationary pressures are expected to weaken, partly due to energy price control measures. Thus, the HNB estimates, inflation in 2022 could amount to 10.3 percent on average, while in 2023 it is expected to slow down to 6.7 percent due to the effect of the base period, the gradual decrease in the prices of raw materials on the world market, the easing of stagnation in supply chains and weakening demand. 

Croatia will enter the eurozone at the beginning of next year during the European Central Bank's tightening monetary policy cycle, which will negatively affect the financing conditions of the domestic economy. However, the reduction of the required reserve ratio and the abolition of the minimum foreign currency liquidity, which the Croatian National Bank has already decided on, will strongly increase the banks' free cash resources and act in the direction of mitigating and slowing down the deterioration of financing conditions on the domestic market, the central bank says.

The coordinated global tightening of monetary policies increased the borrowing costs of most countries, while the increase in yields on Croatian government bonds was nevertheless significantly milder than in the countries of Central and Eastern Europe outside the euro area, thanks to the favorable effects of the imminent introduction of the euro. For now, bank interest rates have not increased either on new or existing loans to companies and households. However, the cost of repaying loans with a variable interest rate could gradually increase, especially for those tied to Euribor, which has already risen strongly, which will be mitigated in the short term by the legal limit on the highest interest rates on consumer loans. The apparent increase in interest rates on new housing loans, along with the pronounced uncertainty and decrease in real incomes, also increases the risk of a reversal in the residential real estate market, where prices and activity continued to grow strongly in the first part of the year.

ZAGREB, 2 Feb 2022 - Raiffeisenbank Austria (RBA) analysts estimate that Croatia's economy grew by 9.2% in 2021, a projection that is subject to positive risks. With regards 2022, they are sticking to their GDP growth estimate of 4.4%, according to the bank's quarterly report RBAnalize published on Wednesday.

In early November 2021, RBA analysts had expected a GDP growth rate of 7% in 2021. However, in late November official statistics showed that GDP in Q3 2021 had risen 15.8% compared to the same period in 2020, revising their initial estimate and forecasting that economy in 2021 could grow by more than 9%.

"We also expect the last quarter to bring solid economic activity growth that would be closer to the first three quarters, when the economy grew at a rate of 10.6%. In any case, real economic activity in 2021 managed to exceed the level of 2019, thus bridging the negative domestic product gap," the latest publication says.

RBA analysts expect GDP to grow by 4.4% in 2022.

"The year 2022 should see the continuation of solid growth rates, albeit markedly lower due to the effect of the base period," the analysts say.

This year's growth is expected to be spurred by investments, supported primarily by ample funding under the National Recovery and Resilience Plan, but RBA analysts warn that "disruptions to supply chains and growing costs continue to pose a certain risk, causing increased uncertainty, thus posing a risk to investment activity, notably in the private sector."

For more, check out our business section.

January the 26th, 2022 - The value of bills and other receipts issued in the Croatian tourism sector for 2022's maiden month of January seems to promise a good year ahead.

As Poslovni Dnevnik writes, across all economic activities registered in the fiscalisation system last week, the value of fiscalised bills and receipts increased by 16 percent compared to the same comparable week back in 2021, and by eight percent compared to the same period in 2020, according to data from the Tax Administration which was published on Monday.

From the 17th to the 23rd of January, 2022, the total value of fiscalised accounts across all industries reached 3.3 billion kuna, which is 16 percent more than was recorded back in the same period last year. At the same time, the number of bills issued in general increased by 20 percent.

The number of bills and receipts issued in the most important activity in the fiscalisation system jumped by as much as seven percent - wholesale and retail trade, the repair of motor vehicles and motorcycles, while their value was higher by 8 percent. Last week, 23.5 million bills/receipts were fiscalised in trade, reaching a grand total of 2.3 billion kuna.

When it comes to the Croatian tourism sector, more precisely the umbrella covering the fields of both catering/hospitality and tourism - activities which include the providing of accommodation and the preparing and serving of food, fiscalised bills/receipts stood at 341 percent more, with 4.8 million of them issued, and their value increased by a very encouraging 219 percent, reaching a massive 216.9 million kuna in total.

It's worth noting that in the same sense regarding the Croatian tourism sector, from the end of November 2020 and throughout January 2021, due to the severely unfavourable epidemiological situation, stricter measures were in force, including the suspension of the work of cafes, bars, pubs and restaurants.

This recent announcement from the Tax Administration also compared last week this year with the same week back in 2020, which is a month or so before the pandemic hit Croatia, 4 percent fewer bills/receipts were issued, but their value was 8 percent higher.

For more, follow our business section.