Croatia’s GDP Grew 3.9 Percent in Fourth Quarter of 2016?

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Analysts warn about high degree of dependence on tourism sector.

The Institute of Economics estimates that, in the last quarter of 2016, GDP growth in Croatia accelerated to 3.9 percent, which would be, if true, the highest growth of Croatian economy since 2007, before the economic crisis began, reports Večernji List on February 9, 2017.

With such growth of the economy in the last quarter of 2016, the average growth for the whole year would reach 3.1 percent, which would be higher than all previous estimates. The political instability that lasted most of the last year obviously did not have a negative spill-over effect for the economy. Also, higher GDP has brought about a reduction in fiscal deficit and public debt.

In the last quarter of 2016, early parliamentary elections were held, with Prime Minister Tihomir Orešković leaving his post and being replaced by Andrej Plenković. Various financial institutions expected BDP growth in 2016 to be between 1.9 and 2.8 percent. The final growth rate will be known on the last day of February, when the Central Bureau of Statistics will announce its data.

The latest optimism by Maruška Vizek, director of the Institute of Economics in Zagreb, is based on its prognostic index which in December 2016 stood at 4.2 percentage points. The Institute of Economics explains that this was the highest value of its index recorded since March 2007.

Zvonimir Savić, an analyst at the Croatian Chamber of Economy, warned that Croatia’s GDP was still nearly nine percent lower than eight years ago, and that it would take at least another four years to make up the lost ground. In addition to industrial production, exports and recovery of domestic consumption, the improved results are a consequence of increased revenues from tourism, which makes up as much as 18 percent of the total GDP.

Savić said that such high degree of dependence on tourism is not present even in island nations such as Cyprus and Malta (12 and 14 percent respectively), while, for example, in Portugal tourism represents only about six percent of GDP.


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