Croatia Economic Forecast

Croatia Economic Outlook

May 7, 2019

Available indicators suggest that the economy gained momentum in the first quarter. Industrial production rebounded solidly in Q1 compared to Q4 2018, on the back of a recovering manufacturing sector. Moreover, despite higher unemployment and lower consumer confidence in Q1 than in Q4, household spending seems to have gained traction as evidenced by the notable pick-up in retail sales in Q1. In other news, in late April, Moody’s affirmed Croatia’s Ba2 credit rating and lifted the outlook from stable to positive, citing the country’s improved fiscal and growth outlooks thanks to prudent policy and recent reforms. This comes on the heels of S&P’s credit rating upgrade to investment class in March. Meanwhile, at the conclusion of its staff visit on 2 May, the IMF acknowledged the country’s declining macroeconomic vulnerabilities but encouraged authorities to streamline the public administration and increase the retirement age in view of pension system sustainability.

Croatia Economic Growth

The economy is expected to maintain solid growth this year. Healthy real wage gains should prop up household spending while a higher absorption of EU funds should propel investment activity ahead. A buoyant tourism industry is also seen contributing to the overall expansion. A sharper slowdown in the EU, which could hit trade and financial flows, clouds the outlook. Met the why particular analysts expect growth of 2.5% in 2019, which is unchanged from last month’s forecast, and 2.5% again 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 Yield1.780.0 %May 13
Exchange Rate6.60-0.54 %May 13
Stock Market1,811-0.48 %May 13

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