Croatia Economic Forecast

Croatia Economic Outlook

October 30, 2018

Incoming data suggests a slight loss of momentum in the third quarter, following healthy growth through the first half of the year driven by sturdy domestic demand. After a modest rise in Q2, industrial output contracted, on average, in July–August on the back of lower production of food and metal products, pointing to a disappointing quarter for the goods-producing sector. Meanwhile, growth of retail sales cooled in the same two-month period, despite record-low unemployment and strong real wage gains, hinting at private consumption losing stride in the quarter. In the political arena, the government presented in late September to parliament a third round of tax reforms, which are set to reduce the VAT considerably on essential items and cut taxes on high-income households, potentially stimulating consumption going forward.

Croatia Economic Growth

Strong consumer spending, underpinned by further tightening of the job market and brisk real wage growth, should keep the economy growing at a solid rate next year. A highly dynamic tourism industry, which is poised to set another record for arrivals this year, should also lend further support to economic activity and contribute to maintaining a healthy current account surplus. Key downside risks to the outlook stem from rising global trade tensions and a potential slowdown in Italy or Germany, the country’s largest trading partners, any of which could bruise external demand. Met the why particular panelists project GDP growth of 2.7% in 2019, unchanged from last month’s forecast, and 2.5% in 2020.

Croatia Economy Data

Population (million)
GDP per capita (EUR)11,33811,38211,70411,27111,811
GDP (EUR bn)
Economic Growth (GDP, annual variation in %)-0.5-
Consumption (annual variation in %)-1.9-
Investment (annual variation in %)1.4-
Industrial Production (annual variation in %)-
Retail Sales (annual variation in %)-
Unemployment Rate21.519.417.614.712.2
Fiscal Balance (% of GDP)-5.3-5.1-3.4-0.90.8
Public Debt (% of GDP)80.584.083.880.678.0
Money (annual variation in %)11.59.611.418.219.1
Inflation Rate (CPI, annual variation in %, eop)0.3-0.5-0.60.2-  
Inflation Rate (HICP, annual variation in %)2.30.2-0.3-0.61.3
Inflation (PPI, annual variation in %)-0.2-2.5-3.7-4.32.0
Policy Interest Rate (%)
Stock Market (annual variation in %)3.1-3.1-2.818.1-7.6
Exchange Rate (vs EUR)7.627.667.647.557.43
Exchange Rate (vs EUR, aop)7.587.637.617.537.46
Current Account (% of GDP)
Current Account Balance (EUR bn)
Trade Balance (EUR billion)-6.6-6.5-7.0-7.3-8.2
Exports (EUR billion)8.99.411.211.511.7
Imports (EUR billion)15.516.017.217.919.8
Exports (annual variation in %)
Imports (annual variation in %)
International Reserves (EUR)12.912.713.713.515.7
External Debt (% of GDP)11511611188.682.6

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Croatia Facts

Bond Yield2.150.0 %Nov 13
Exchange Rate6.58-0.54 %Nov 13
Stock Market1,761-0.48 %Nov 13

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