Croatia Economic Forecast

Croatia Economic Outlook

September 4, 2018

Recently released GDP data revealed that the economy shifted into a higher gear in Q2, following a solid Q1 performance that was mainly driven by buoyant domestic demand. In contrast, the second-quarter expansion was propelled by the external sector, as exports of goods and services rebounded sharply and outpaced the growth in imports. On the domestic front, private consumption lost some steam but remained robust overall, buttressed by a tightening labor market—the unemployment rate fell throughout the quarter and reached a new all-time low in June—and robust real wage gains which have translated into higher purchasing power for households. Heading into Q3, leading data paints a mixed picture: While consumer confidence improved in July, business sentiment turned less upbeat. That said, however, another likely record-breaking tourism season this year coupled with FIFA World Cup-related surge in consumer spending should prop up overall economic activity in Q3.

Croatia Economic Growth

Healthy private consumption, supported by a tight job market and rising real wages, and a booming tourism industry are seen as the key drivers of growth this year. Given strong consumer and capital spending and their associated rise in import demand, however, the external sector may drag on overall economic performance. Meanwhile, a key downside risk to the short-term outlook stemming from a disorderly restructuring of the food and retail giant Agrokor, Croatia’s largest private employer, has faded after creditors reached a debt settlement deal in late July. 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

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 Yield2.160.0 %Sep 20
Exchange Rate6.31-0.54 %Sep 20
Stock Market1,805-0.48 %Sep 20

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