A strong third quarter for Croatia’s economy.
Croatian economy grew by 2.8 percent in the third quarter compared to the same period last year, which was the fastest growth since 2008 and above-average growth compared to the EU, the Central Bureau of Statistics announced on Friday. That is much higher growth than expected. Eight macroeconomists, who participated in a survey conducted by Hina, estimated on average that the economy in the third quarter would grow by 2.2 percent compared to the same period last year, with their estimates ranging from 1.6 to 3 percent, reports Poslovni.hr on November 27, 2015.
“The growth is higher than expected and we have to be satisfied. These are the rates of growth which, if they continue, would result in a positive impact on domestic labour market and the gradual recovery of the standard of living”, Zdeslav Šantić, chief economist of Splitska Banka, said.
It is the fourth consecutive quarter of GDP growth. In the previous quarter, the economy grew by 1.2 percent. It is also the biggest economic growth since the second quarter of 2008, when GDP jumped by 2.9 percent on an annual basis.
Central Bureau of Statistics announced that, among the components of domestic demand, the strongest positive impact was caused by the growth of expenditures on consumption of households, which grew by 1.4 percent. “That is the largest generator of economic activity. In addition to factors like growth in real household disposable incomes and changes in the income tax system, the increased number of tourists during the tourist season certainly contributed to good results”, Šantić said.
He also noticed the rapid recovery of capital investments, which until this year represented the most significant obstacle to recovery. Gross fixed capital investments rose in the third quarter by 2.2 percent year on year, while in the previous quarter they grew by just 0.8 percent. The exports of goods and services have also increased by 8 percent. “The importance of exports of goods and services was higher than in the previous quarter, thanks to the successful tourist season”, Šantić added.
However, Šantić warned that risks still exist. “There are now these political factors and we must not ignore the fiscal risks, since most of the EU member states have already implemented fiscal consolidation, which has not happened in Croatia”, Šantić warned. He expects that the growth of GDP in 2015 could be around 1 percent. “Due to these risks, we could witness the slowdown in GDP growth next year. In the fourth quarter of this year, we also expect certain slowdown, not only because of the elections, but because the personal spending in the present circumstances cannot provide such high rates of GDP growth in the future”, Šantić explained.
“In comparison with the previous quarter, the economy grew by 1.3 percent, which is together with Romania (1.4 percent) the highest growth rate in the EU member states. The average quarterly growth rate of the EU in the reporting period amounted to 0.4 percent. The average GDP growth on an annual basis in the EU was 1.9 percent”, analysts of Raiffeisenbank Austria explained. They concluded that it was likely that the growth of the economy, though at a slightly lower rate, would continue in the last quarter, which would imply the growth for the whole year of more than 1 percent.