Croatia Economic Forecast

Croatia Economic Outlook

July 3, 2018

Available data points to the continued strength of domestic demand in Q2, which had underpinned the solid economic expansion logged in Q1. Healthy retail sales growth in April, supported by a tightening labor market and robust gains in real earnings, and record-high consumer optimism in May suggest private consumption remained buoyant in Q2, despite the recent pick-up in inflation. Furthermore, the all-important tourism industry—which accounts for nearly 11% of exports—remains vibrant, with tourist arrivals up by double-digits year-on-year in January–April, hinting at a new record-breaking season this year. Meanwhile, the creditors of the highly-indebted conglomerate Agrokor reached a draft debt settlement agreement on 19 June, whereby the biggest single creditor, Russia’s Sberbank, would become the largest shareholder with a nearly 11% equity stake. Creditors will vote on the deal on 4 July; a two-thirds majority, which is widely expected, is required for the vote to become valid.

Croatia Economic Growth

Economic activity should remain strong this year, buttressed by a dynamic tourism industry, which is a key source of employment and export revenues; and robust consumer spending, supported by the steady growth of real earnings and falling unemployment. Absorption capacity of EU funds is also set to improve, boding well for capital spending. Although a disorderly restructuring of Agrokor is unlikely, it remains a risk to the outlook. Met the why particular panelists project GDP growth of 2.7% in 2018, unchanged from last month’s forecast, and 2.7% again in 2019.

Croatia Economy Data

20132014201520162017
Population (million)4.34.24.24.24.1
GDP per capita (EUR)11,33811,38211,70411,27111,811
GDP (EUR bn)44.044.045.047.049.0
Economic Growth (GDP, annual variation in %)-0.5-0.12.43.52.9
Consumption (annual variation in %)-1.9-1.61.03.43.6
Investment (annual variation in %)1.4-2.83.86.53.8
Industrial Production (annual variation in %)-1.71.22.55.01.9
Retail Sales (annual variation in %)-0.30.42.44.04.7
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 (%)7.007.003.003.003.00
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)0.91.84.42.64.4
Current Account Balance (EUR bn)0.40.92.01.21.9
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 %)2.95.88.03.111.1
Imports (annual variation in %)3.62.87.64.011.1
International Reserves (EUR)12.912.713.713.515.7
External Debt (% of GDP)11511611188.682.6

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Croatia Facts

ValueChangeDate
Bond Yield2.180.0 %Jul 13
Exchange Rate6.33-0.54 %Jul 13
Stock Market1,808-0.48 %Jul 13

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