High personal spending continues to support the growth of the Croatian economy, but due to the fall in industrial production and the slowdown in tourism growth, macroeconomists estimate that GDP growth slowed down in the third quarter, reports Večernji List on November 26, 2018.
The Central Bureau of Statistics (CBS) will release its first GDP estimate in the third quarter of 2018 this week, and eight macroeconomists who took part in the Hina survey estimated on average that the economy grew by 2.3 percent compared to the same period last year. Their growth estimates range from 2.2 to 2.5 percent.
It will be the seventh quarter in a row of GDP growth, but slower than in the previous one when the economy grew 2.9 percent year-on-year.
All macroeconomists polled agree that the growth of the economy is still supported mostly by personal spending, the largest component of GDP. This is evidenced by the growth in retail trade turnover on an annual basis for 49 months in a row, which has not been recorded since the CBS started collecting this data.
Consumption is also supported by tourism, which has the biggest impact on GDP in the third quarter. For this reason, in the last few years, the GDP growth accelerated in the third quarter relative to the second quarter. However, macroeconomists point out that in the third quarter of this year there was a relatively slower growth of tourism due to limited capacity and recovery of competitive markets. In 2017, according to CBS data, tourist arrivals rose by 13 percent, while the number of overnights increased by 10.6 percent. “However, in the third quarter of 2018, growth rates of tourist arrivals and overnight stays were significantly lower than in the same quarter of 2017,” the survey says.
On the other hand, industrial production was growing for years, but in the third quarter, according to the CBS data, it fell by 1.5 percent compared to the same period last year, partly due to the crisis in the Uljanik shipbuilding group. Since the end of last year, industrial production has been very unstable, so in 9 of the last 11 months, it has declined year-on-year. Therefore, in the first nine months of this year, the industrial production was 0.3 percent lower than in the same period last year.
Estimates for the third quarter are in line with expectations that the GDP growth for the whole year will be somewhat slower than in 2017 when it reached 2.9 percent. The macroeconomists estimate on average that growth in 2018 could reach 2.7 percent. Their growth estimates range from 2.6 to 3 percent, but some macroeconomists warn that they could reduce their estimates after the publication of data for the third quarter.
In a recent budget review, the government reduced its economic growth forecast for this year from 2.9 to 2.7 percent.
For more on Croatia’s economic growth, such as it is, click here.
