Croatia’s GDP Grew 3% in Third Quarter?

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Economic forecasts point to acceleration of GDP growth.

Thanks to the growth of consumption and investments, as well as the record-breaking tourist season, macroeconomists estimate that Croatian economy in the third quarter grew by about 3 percent, the fastest in eight years, report Jutarnji List on November 27, 2016.

Next week, the Central Bureau of Statistics will publish its first assessment of the gross domestic product (GDP) growth in the third quarter, and eight macroeconomists estimated on average that the economy grew by 2.9 percent compared to the same period last year. Their growth estimates ranged from 2.5 to 3.3 percent. That would be the eighth consecutive quarter of GDP growth, and the growth would be accelerated in comparison with the previous quarter, when the economy grew by 2.8 percent year-on-year. The growth of 2.9 percent would be the fastest since the second quarter of 2008, when GDP grew at the same rate.

The macroeconomists indicated that the economic growth accelerated mainly due to strengthening of private consumption, which is the largest component of GDP. Turnover in retail trade has increased year-on-year for 25 consecutive months. The third-quarter retail sales grew by about 4.7 percent compared to the same period last year.

The average net salary per employee in businesses in September stood at 5,624 kuna, which was 2.3 percent more in real terms than in the same month last year, according to analysts of Raiffeisen Bank (RBA).

One of reasons for the strengthening of consumption is deflation and low energy prices, which led to an increase in disposable income of citizens. “Private consumption will continue to find support in the absence of inflationary pressures, favourable developments in the labour market, as well as strong growth in tourism indicators”, said one of the macroeconomists.

Income from tourism this year could exceed the record 8 billion euros, said one of the macroeconomists, adding that “strong growth in tourism revenues from abroad should result in a positive contribution of net exports to GDP trends, despite the rise in imports of goods”. Another positive factor on GDP is the strengthening of industrial production, which in the third quarter increased by about 1.9 percent compared to the same time last year. However, this is somewhat slower than in the previous quarter, when the industrial production grew by 3.5 percent.

Due to good indicators in the first nine months of this year, nearly all macroeconomists have increased their estimates of economic growth for the entire 2016. According to the latest survey, the eight macroeconomists expect, on average, GDP growth of 2.6 percent, while three months ago they expected growth of 2.1 percent. Their growth estimates range from 2.5 to 2.8 percent.


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