According to the latest GDP estimate by the Croatian Bureau of Statistics, in Q2 2024, Croatian GDP grew by 3% YoY in real terms, amounting to EUR 20.8bn during the quarter. Compared to the previous quarter, this represents an increase of 0.8%. Lastly, in the last 4 quarters ending in Q2 2024, the Croatian GDP at current prices amounted to EUR 79.9bn.
Last week, the Croatian Bureau of Statistics, DZS, released its first GDP estimate for Q2 2024. According to that report, the seasonally adjusted GDP grew by 3% YoY in real terms and amounted to EUR 20.8bn at the current prices. Compared to the previous quarter, the GDP growth rate amounted to 0.8%.
Croatian GDP growth (2007 – Q2 2024, YoY, %)*
Source: Croatian Bureau of Statistics, InterCapital Research
*Quarterly Gross Domestic Product, seasonally-adjusted real growth rates
If we were to look at the last twelve months ending in Q2 2024, the Croatian GDP then amounted to EUR 79.9bn. In terms of GDP components, final consumption expenditure grew by 5.3% YoY in real terms, with households recording a 6.1% increase YoY, General government a 4% growth, and NPISH recorded a 4.3% decline YoY. Meanwhile, gross fixed capital formation recorded solid double-digit growth at 12.9% YoY.
Moving on, exports of goods and services declined by 1.3% YoY, mainly as a result of a 5.2% decline in services exports, while goods exports grew by 3.1% YoY. On the other hand, the import of goods and services grew by 5.2% YoY, supported by both the import of goods at 5.3% and the import of services at 4.5%. While these changes aren’t that large, it would mean that the deficit would widen, as more funds are used for imports, while less is being exported. What’s even more worrying is that the decline in exports is due to service export decline, and while Q2 is certainly not the main quarter when the most important service (tourism) is at its height, it would imply a worrying sign for Q3 if the trend continues. On the flip side, the increase in goods exports is a good sign.
Overall, Croatia has recorded above-average growth rates in the last couple of years, after an even stronger recovery following the end of the pandemic. Moving forward, Q3 numbers should also increase, as thus far, the number of tourist arrivals and nights is quite stable YoY, but with higher prices and thus higher revenues. As such, exports, especially of services should stabilize. Furthermore, given that domestic tourists also contribute strongly to the tourism season, personal consumption (part of the final consumption expenditure line of the GDP) should also increase, as it is one of the primary drivers of growth besides investments.
Investments in turn (dubbed gross fixed capital formation in the GDP breakdown) have been supported by strong investments into real estate, but also the many smaller and medium-scale infrastructure projects whose progress is strongly supported by the influx of funds from the various EU funds. As more funds are expected in this category, and as real estate growth (both in terms of pricing but also demand) continues to grow, continued investment growth could be expected for the rest of the year.
