Croatia Economic Forecast

Croatia Economic Outlook

March 5, 2019

Recently-released national accounts data showed that the economy lost steam in the final quarter of 2018, as annual growth moderated to a one-year low, following a solid third-quarter outturn which was underpinned by upbeat domestic demand. A weak external sector dragged on overall activity as exports barely grew, which were primarily supported by the booming tourism industry, while imports spiked. Similar to Q3, the fourth-quarter expansion was propped up by healthy demand at home: Private consumption strengthened notably amid lower inflation and improved consumer confidence, while fixed investment growth jumped to a near two-year high. Going forward, the unemployment rate climbed for the fourth month in a row in January while consumer confidence deteriorated yet again in February—both hinting at the persistence of soft dynamics at the start of the year.

Croatia Economic Growth

Broadly stable and solid growth is expected this year, driven chiefly by firm domestic demand. An improving labor market, healthy wage growth and subdued inflation should buoy private consumption, while fixed investment should benefit from higher disbursement of EU funds and still-low borrowing costs. A sharper-than-anticipated slowdown in major trading partners in the EU poses a key downside risk to the outlook. Met the why particular analysts expect growth of 2.7% in 2019, unchanged from last month’s forecast, and 2.5% in 2020.

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 %)-  -  -  -  -  
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 Yield1.860.0 %Mar 20
Exchange Rate6.50-0.54 %Mar 20
Stock Market1,787-0.48 %Mar 20

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