Good news for Croatia’s economy.
In the fourth quarter of last year, Croatian economy grew by 3.4 percent year-on-year, which is the fastest growth in almost nine years and higher growth than expected, announced on Tuesday the Central Bureau of Statistics, reports Večernji List on February 28, 2017.
Earlier, eight macroeconomists who participated in a survey estimated on average that the economy grew by 3.3 percent year-on-year. Their growth estimates were in the range of 2.7 to 3.8 percent.
This is the ninth consecutive quarter that GDP is growing. Growth of 3.4 percent is the fastest since the first quarter of 2008, when GDP also increased by 3.4 percent. “There are no big surprises, GDP growth is in line with expectations, as well as with data coming from individual sectors”, said Zdeslav Šantić, chief economist at Splitska Banka.
The Central Bureau of Statistics announced that the largest positive contribution to the increase in GDP in the last quarter was growth of exports of goods by 12.4 percent compared to the same period last year, while the imports of goods increased by 9.5 percent.
GDP was also positively influenced by domestic demand. Consumption of households grew by 3.6 percent year-on-year, faster than the 3.4 percent growth in the previous quarter. “Given the importance of household spending on overall economic activity, but also the fact that it rose very strongly in December, it is not surprising that personal consumption gave such a strong contribution to GDP growth”, said Šantić.
Gross fixed capital investment grew in the fourth quarter of last year by 4.6 percent year-on-year, faster than the 2.9 percent growth in the previous quarter. However, despite strong export growth, the contribution of net external demand was negative, by 0.3 percentage points. “The contribution of net external demand was negative due to the fact that imports increased at almost the same rate as exports, and imports are still slightly higher than exports”, explained Šantić.
In addition to consumption and investments, other major components of GDP also increased. The state spending increased by 1.8 percent on the annual basis, which was slightly slower than the 2.1 percent growth recorded in the previous quarter.
According to seasonally adjusted data, GDP in the fourth quarter rose by 0.6 percent compared to the previous quarter, while compared to the fourth quarter of 2015 it increased by 3.5 percent. This is faster than the average of the European Union. According to recent data published by Eurostat, the EU economy grew in the final quarter of last year by 0.5 percent quarter-on-quarter and 1.8 percent year-on-year.
In the whole of 2016, Croatian economy grew by 2.9 percent, which is biggest jump since 2007, when GDP grew by 5.2 percent. This is significantly higher growth than 1.6 percent in 2015, when the economy recorded the first growth after six years of recession.
In 2017, it is expected that GDP growth will continue. “For now, we stay with our forecast that growth in 2017 will be 3.1 percent. The dominant role will be played by household consumption, due to changes in tax policy that will stimulate further growth in this segment. We also expect continued growth in capital investments, supported by better use of EU funds”, said Šantić.
According to analysts of Raiffeisenbank Austria (RBA), economic growth in 2017 will be 3.3 percent. European Commission recently increased its estimate of growth of the Croatian economy in 2017 from 2.5 to 3.1 percent. The Croatian National Bank expects GDP growth of about 3 percent, while the government planned this year’s budget on the basis of growth of 3.2 percent.
