Croatia: Economic growth picks up in Q2
The Croatian economy gained momentum in the second quarter, according to detailed GDP data released by the Statistical Institute on 31 August. Annual economic growth reached 2.9% in the second quarter, up from the 2.5% expansion recorded in the first quarter. Resilient domestic demand and a stronger external sector performance drove the acceleration in growth.
Private consumption grew 3.6% in year-on-year terms in Q2, slightly below the 3.9% rise logged in Q1, which had marked the strongest print in nearly a decade. Solid consumer spending was underpinned by a booming tourism industry, a tightening job market and robust wage growth. In addition, fixed investment expanded 3.1% on an annual basis, moderating from Q1’s 3.6% increase. Meanwhile, public expenditure growth eased again in Q2, coming in at 2.5% (Q1: +2.8% year-on-year).
The external sector was the highlight of the report. Exports of goods and services rebounded strongly in Q2, increasing 5.6% year-on-year and contrasting Q1’s 0.5% dip. The jump was driven by a notable pick-up in both merchandise and services exports compared to Q1. Meanwhile, import growth lost steam in Q2, decelerating to 4.7% from 5.5% in Q1. Taken together, the external sector contributed 0.2 percentage points to headline growth, a sharp contrast from the 3.0 percentage point subtraction recorded in the previous quarter.
Looking ahead, economic growth will continue to be underpinned by a vibrant tourism sector and robust domestic demand. Consumer spending should be buoyed by further improvements in the labor market and higher household real incomes, while improved absorption of EU structural funds should lend support to capital spending ahead.