Unexpectedly good news for Croatian economy.
Croatian economy grew in the first quarter by 2.7 percent compared to the same period last year, which is faster than in the previous quarter and higher than expected, reports Index.hr on May 31, 2016.
The Central Bureau of Statistics announced on Tuesday its first assessment of the gross domestic product (GDP) in the first quarter of 2016. The increase of 2.7 was higher than expected. This is the sixth quarter in a row that GDP is growing, and this time the increase was higher than in the previous quarter, when economy grew by 1.9 percent.
Reacting to the news, Prime Minister Tihomir Orešković said that he was “happy” with the GDP growth. “I hope that positive news will finally spread. We can see that exports are increasing, and that the economic climate is changing. The growth of 2.7 percent is a positive indicator and it will have positive effects on debt and deficit”, said Orešković.
Former Deputy Prime Minister Branko Grčić (SDP) said that the growth of the Croatian economy was a result of activities made by previous government, pointing out that the new government’s results would be seen in the second half of the year. “This is the sixth quarter in a row that we have GDP growth. This means that we have done a good job”, said Grčić.
Economic analysts said that higher than expected growth of the Croatian economy in the first quarter was definitely good news, but warned that continued political instability could negatively affect the economy.
“GDP growth was slightly stronger than expected, with the main engine of growth being the export of goods and household consumption, which grew by more than three percent”, said Zdeslav Šantić, chief economist at Societe Generale Splitska Banka. “Early Easter holidays this year and the fact that we had one working day more in the first quarter, given that this is a leap year, certainly had an impact on the growth of economic activities at the beginning of the year”, said Šantić. He expects GDP to continue to grow in the rest of the year, but at a slower pace, with the full-year GDP growth of around 1.5 percent.
Raiffeisen Bank (RBA) analysts did not change their earlier estimate that GDP would increase by 1.5 percent this year. “In the short term, there is a positive possibility that growth could reach 2 percent, especially in the case of another outstanding tourist season, improved investment climate, and stronger withdrawal of EU funds”, sad RBA analysts. On the other hand, they listed negative risks stemming in part from external factors. “Apart from risks of increasing instability on the domestic political scene, a delay in the consolidation of public finances and in improving unfavourable business environment would certainly have a negative impact on the credit rating and investments”, conclude RBA analysts.