In 2022, HNB expects inflation to slightly decelerate to 2.1%, due to lower projected growth in energy prices.
Croatian National Bank (HNB) noted that when it comes to current economic trends, the model of rapid GDP assessment indicates that the growth of economic activity accelerated in the Q2 compared to the previous quarter, which was mainly due to a solid performance of the tourist season. In 2021, HNB expects the annual growth rate of real GDP to be 8.5%, which reflects the strong growth of exports of goods and services as well as domestic demand.
As the pre-pandemic level of economic activity is expected to be reached this year, growth will slow down in 2022 and the growth rate could be 4.1%, according to HNB. At the same time, strong growth in exports of goods and services is expected to continue, and the inflow from EU funds is expected to affect the growth of domestic demand.
HNB noted that favorable trends in the labor market continued, so that the number of employed people exceeded the pre-crisis level in the middle of the current year, while the number of unemployed ones is still slightly above that level.
In 2021 and 2022, an annual increase in the number of employees and a decrease in the unemployment rate is expected by HNB, while the growth of labor productivity and strong demand for workers could support the continuation of wage growth, especially in dynamic segments of the economy.
HNB added that annual growth in consumer prices accelerated from 2.8% in July to 3.1% in August, mostly as a result of accelerating annual growth in food prices. Although core inflation also rose slightly in August, it remained relatively low at 1.8%. Consumer price inflation could temporarily accelerate to 2.3% (from 0.1% in 2020) throughout 2021, due to an increase in the annual rate of change in energy prices, especially of petroleum products. In 2022, inflation is expected to slightly decelerate to 2.1%, due to lower projected growth in energy prices. However, the negative risks related to the inflation projection were emphasized, i.e. the possibility that it will exceed the projection.
CPI (January 2013 – August 2021)*
Source: Croatian Bureau of Statistics, InterCapital Research