Economists Expect GDP Growth of More Than 2% in Second Quarter

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The Central Bureau of Statistics will soon announce its first estimate of GDP growth in the second quarter.

Thanks to the growth of consumption, industrial production and investments, as well as the contribution of tourism, macroeconomists estimate that Croatian economy in the second quarter once again grew by more than 2 percent, but more slowly than in the previous quarter, reports on August 28, 2016.

In the next few days, the Central Bureau of Statistics will publish its first estimate of GDP growth in the second quarter, and eight macroeconomists who participated in a survey estimated on average that the economy grew by 2.3 percent compared to the same period last year. That would be the seventh consecutive quarter that GDP is growing, but more slowly than in the previous quarter, when the economy grew 2.7 percent year-on-year.

Macroeconomists believe that the economic growth has been achieved mainly thanks to the growth of private consumption, which is the largest component of GDP. This is indicated by the rise of turnover in retail trade for 22 consecutive months, which has not been recorded since the Bureau started monitoring the data. In the second quarter, retail sales increased by 3.3 percent compared to the same period last year. “Personal consumption is encouraged by good results of the tourist season and seasonal improvement in the labour market, together with the continued decline in average prices of consumer goods”, said one of the macroeconomists. According to data, the average net salary per employee in June stood at 5,686 kuna, which is a 2.4 percent more in real terms than in the same month last year. In addition to wage growth, the boost in consumption is a consequence of deflation and low energy prices, which leads to an increase in disposable income of citizens.

Macroeconomists also point out that in the first half of the year excellent results were achieved in tourism. In the first six months, the number of overnight stays increased by 4.4 percent compared to the same period last year, and reached 16.5 million. Revenue from tourism could reach record 8 billion euros this year.

The GDP growth will be positively influenced by the strengthening of industrial production as well, which in the second quarter increased by 3.5 percent. Although the growth is slower than the previous quarter, when the industry grew by 6.8 percent, industrial production has been growing steadily for 17 consecutive months, which is the longest such period since 2007.

Thanks to good indicators for the first half of the year, nearly all macroeconomists have increased their estimates of economic growth in 2016. According to the survey, they now expect GDP growth of 2.1 percent, while three months ago they expected growth of 1.4 percent. The Croatian National Bank has recently also increased its GDP growth estimate from 1.8 to 2.3 percent. The Zagreb Economics Institute and the International Monetary Fund expect that the Croatian economy will grow by 1.9 percent, while the European Commission estimates GDP growth of 1.8 percent. All these estimates are close to the government’s forecast, which planned this year’s budget with the expectation that the economic growth would be 2 percent.


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