“Somewhat slower growth than in the first quarter of last year, when the GDP grew by 2.7 percent, is expected mainly due to significant deceleration of industrial production growth,” stated a macroeconomist
Mainly due to the strong growth in personal spending and export, most macroeconomists estimate the Croatian economy grew in the first trimester by over 3 percent at the annual level, but also slower than in the previous trimester, Večernji List reported on May 28, 2017.
The Central Bureau of Statistics (DZS) will announce in this week the first estimate of the gross domestic product (GDP) in the first trimester of this year, while eight macroeconomists, who participated in a poll by Hina, estimated the average growth of the economy was 3.1 percent compared to the same time last year.
Their growth estimates are in a broad spectrum from 2.3 to 4.2 percent. This will be the ninth trimester in a row of GDP growth, but slower than the previous, when the economy grew by 3.4 percent annually, highest since the first quarter of the pre-recession 2008.
Macroeconomists cited the growth is attributed mostly due to stronger personal spending, the largest component of the GDP. “Personal spending finds support in the tax alleviation of income, growth of salaries, labour market stabilisation and lower financing costs,” cited one of the macroeconomists. Turnover in retail at the annual level has been growing for 31 months in a row, the longest streak since the DZS collects such data.
The average net salary in companies for March was 6.022 kuna, nominally higher at the annual level by 5.2 percent.
Export of goods jumped in the first three months of this year by 21.1 percent compared to the same period last year, to 24.9 billion kunas. At the same time import grew by 11.33 percent, to 37.93 billion kunas.
While spending and export push GDP growth, the positive influence of industrial production will be weaker as its growth is slowing down. In the first three months of this year, it grew only 2 percent compared to last year. This is a steep deceleration, considering in the previous quarter it grew by 8 percent. Production decreased at the annual level in March, ending the growth trend of 25 months.
Considering the first trimester, most macroeconomists will not alter the GDP growth predictions for 2017. On average they estimate a 3.1 percent growth. They noted the Agrokor crisis will certainly influence GDP growth in this year. The sales of Agrokor amount to 15 percent of the GDP, with business connections to almost 2.000 companies, so its effect on the entire economy is currently difficult to estimate due to a lack of reliable data.
Macroeconomists also note there are a line of positive factors which will soften the negative influence of Agrokor, like the expected record tourism season, growing export of goods, stronger EU financing as well as fiscal relaxation.
The European Commission was the first to react to the risk of Agrokor, reducing the growth estimate of the Croatian GDP from 3.1 to 2.9 percent.
The government is basing its annual budget on a growth estimate of 3.2 percent. “Current macroeconomic expectations are exposed more to negative risks tied to the restructuring of the largest Croatian company. The fourth trimester will be the most challenging,” said a macroeconomist in the Hina poll.