Croatia’s Q1 GDP may turn out positive, but slump expected in remainder of year

ZAGREB, May 24 (Hina) – Analysts polled by Hina on Croatia’s GDP trends in the first quarter of 2020 give different opinions on whether the economy grew or contracted in that period, however, they all estimate that it is going to decline, anyway, this year due the corona crisis.

The national statistical office (DZS) will release first estimates of the Q1 economic growth in a few days, and the six analysts polled by Hina are divided in their estimates whether Croatia’s growth was positive or negative.

Thus, three analysts forecast a decline ranging between 0.5% and 4% in the Q1 2020. If the estimates prove correct, this will bring an end to a rising streak since mid-2014.

The other three analyses predict positive growth between 0.5% and 1%. If these estimates prove correct, it will mean that this will be the slowest growth rate since the end of 2014.

All six analysts also assess that personal consumption remains the biggest contribution to GDP.

The retail trade in Q1 2020 increased by 0.9% compared to the corresponding period in 2019. This was, however, a slower pace than the growth of this parameter in recent years.

On the other hand, the outbreak of COVID-19 and the consequences of that pandemic, including the lockdown in the second half of March as well as travel restrictions that affected the tourist trade, were the reasons for a drastic slump in consumption.

Croatia’s economic output in the Q1 2020 plunged 4.2% on the year, and exports stagnated.

Sharpest economic decline in Q2 since coronavirus lockdown begins to take toll

The six analysts also predict the sharpest downturn in Q2 2020 since the start of keeping statistics in 2000. The estimated decline is between 15% and 25%.

At the outbreak of the financial crisis in Croatia in early 2009, the economy contracted 8.8%, which was a record plunge. 

Corona crisis to be shorter than financial one just over a decade ago

The sharp slump in the second quarter of this year is expected to be offset to some extent by the economic performance in the second half of 2020 when lockdown measures are likely to be eased and enterprises can begin business as normal. 

Thus, the analysts’ growth estimates for the whole of this year are between -7.5% and -12.5%.

EC: Croatia can quickly rebound in 2021, as it is in better shape than in 2008

On 6 May, the European Commission said that Croatia’s economy entered the COVID-19 crisis in significantly better shape than the crisis in 2008 and is expected to quickly recover in 2021.

After the contraction of an estimated 9.1% in 2020 due to the corona crisis, Croatia’s economy is likely to rebound at a rate of 7.5% in 2021, according to the EC spring forecasts. The EC forecasts are more optimistic than the Croatian government’s projections of the downturn of 9.4% in 2020 and the  6.1% rebound next year.