Croatia’s GDP Grew More Than 3% in Last Quarter of 2016?

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That would be the highest GDP growth since 2008.

Due to the growth in private consumption, investment and industrial production, macroeconomists estimate that Croatian economy in the fourth quarter of last year grew by more than 3 percent, which would be the biggest jump in nearly nine years, reports on February 27, 2017.

The Central Bureau of Statistics will announce this week its first assessment of the gross domestic product (GDP) growth in the last quarter of 2016, but eight economists who participated in a survey by HINA estimate on average that the economy grew by 3.3 percent compared to same period last year. Their growth estimates range from 2.7 to 3.8 percent.

This will be the ninth consecutive quarter that GDP is growing, and more quickly than in the previous quarter, when the economy grew 2.9 percent year-on-year. The growth of 3.3 percent would be the fastest since the first quarter of 2008, when GDP grew by 3.4 percent.

The economists indicate that the economy grew mainly thanks to strengthening of private consumption, which is the largest component of GDP. “The largest contribution to growth is expected from private consumption, which was encouraged by reports about tax cuts, and the positive trend was also indicated by general mood, confidence and consumer expectations”, said one of the survey participants.

Turnover in retail trade year-on-year has increased for 28 consecutive months, which has not been recorded since the Central Bureau of Statistics started monitoring the data. In the fourth quarter of last year, retail sales grew by about 4.6 percent compared to the same period last year.

The average net salary per employee in businesses in December stood at 5,838 kuna, which is nominally 1.1 percent more than the year before. “Personal consumption finds support in lowering of tax burden on incomes, the growth of wages, stabilization of the labour market and lower financing costs”, said the economists.

Positive effect on GDP growth is also made by strong acceleration of growth in industrial production, which has strengthened for 23 consecutive months, which is the longest such period since 2007. Thanks to a record jump in December by 14.9 percent, in last year’s fourth quarter production was up by about 7.9 percent compared to the same period a year ago.

Exports continued to increase for the third year in a row. According to preliminary data, the value of Croatian goods exports increased last year by 5.1 percent, to 92 billion kuna. This is mainly thanks to economic growth of the European Union, the Croatian largest foreign trade partner. At the same time, imports increased by 4.6 percent to 147 billion kuna. Trade deficit amounted to about 55 billion kuna, while the export-import ratio reached 62.6 percent, as opposed to 62.4 percent a year ago.

Thanks to the gradual acceleration of GDP growth from 2.7 percent in the first quarter, 2.8 percent in the second quarter and 2.9 percent in the third quarter last year, as well as the prospect of an acceleration in the fourth quarter, all macroeconomists have increased their estimates of economic growth for the whole of 2016.

According to the latest survey, the macroeconomists estimate that GDP growth last year stood at 2.9 percent, while three months ago they expected 2.6 percent. Their estimates range from 2.5 to 3.1 percent.

In this year, they expect further acceleration of GDP growth. The economists estimated on average that GDP will increase by 3.1 percent this year. Recently, the European Commission increased its estimate from previous 2.5 to 3.1 percent. The Croatian National Bank has increased its estimate of GDP growth this year from 2.5 percent to 3 percent.

The government has based the budget for this year on expectations of economic growth of 3.2 percent.

If GDP grows by more than 3 percent in 2017, it would be the biggest growth of the economy since 2007, when it grew by 5.2 percent.


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