On Friday, the Croatian Bureau of Statistics published its first estimate for the GDP in Q2 2022. According to the estimate, the GDP grew by 7.7% YoY in real terms. In H1, GDP increased 7.4% in H1 2022 in real terms.
According to the first estimates of the Croatian Bureau of Statistics, GDP grew by 7.7% YoY in real terms in Q2 2022. It should be noted that this refers to the non-adjusted data. According to the seasonally adjusted data, the GDP increased by 2% compared to the previous quarter, 7.8% YoY. In H1, GDP increased 7.4% in real terms.
Final consumption, the largest contributor to the GDP, increased by 4.7% in Q2 2022, continuing the economic growth (and recovery) that started in Q2 2021 with the complete easing of COVID-19 measures and the total reopening of the economy. This is also evident if we look at the households (the largest contributor to the final consumption at 75%), which grew by 7.7% YoY. However, we note current inflationary pressures are persistent with inflation numbers peaking, which might discourage further growth in final consumption resulting in lower growth rates in the second half of the year. Next up, we have the General government (making up the remaining 25% of the final consumption), which decreased by 2.2% YoY. Meanwhile, Gross fixed capital formation increased by 5%, and this number is expected to keep growing as more funds from the EU continue to be implemented in the economy.
Further, we note that the highest nominal impact was recorded in changes in inventories, which grew from HRK 9bn to HRK 14bn in Q2 YoY. This increase of HRK 15bn in changes in inventories boosted Total gross capital formation, which is one of four main GDP categories.
At the same time, the export of goods and services increased significantly, growing by 41.9% YoY. Tourism has significantly affected growth of GDP while the export of services grew by 65.7% YoY. It is also very positive that the export of goods continues to grow with double-digit figures (26.5% YoY), showing increased demand for domestic products. This is further evidence that the complete easing of measures and border restrictions has significantly impacted the growth of exports.
On the other hand, the import of goods and services also grew significantly, increasing by 28.6% YoY. Out of this, goods grew by 30.7%, while services grew by 15.1%, due to the fact that imports which amounted to HRK 67.8bn, were relatively higher than exports (HRK 61.5bn). This means that even with higher export growth, there were still net negative exports of HRK -6.3bn reported. Nevertheless, the recovery of tourism contributed to GDP growth due to mentioned better net negative export results.
In total, GDP in H1 2022, in real terms amounted to HRK 165.242bn, representing a 7.4% increase YoY. As the current inflationary pressures peak and the supply chains are still in a precarious situation (but much better than compared to 2021), the GDP growth is expected to continue. However, this growth should happen at a slower pace than especially the levels seen in 2021 (it should be noted that Q3 2021 GDP growth amounted to 15.1%, and Q4 amounted to 9.7%) meaning that the base is also higher. As such, and according to most forecasts for FY 2022, the growth should be between 3-4%.
Croatian GDP, real growth rates (%, YoY)*
*Quarterly Gross Domestic Product, seasonally adjusted real growth rates
