On Friday, the Croatian Bureau of Statistics published its first estimate on GDP for Q1 2020 showing that in real terms it increased by 0.3% YoY (seasonally adjusted data).
The slowdown in GDP growth in the first quarter of 2020 is a result of decelerated growth of household consumption expenditure and of a decrease in exports of goods and services.
Final consumption continues to be the main contributor to GDP which observed a slowdown in growth (+1.8%). The largest part of final consumption, household expenditure increased 0.7% YoY, while general government’s expenditure amounting to roughly 1/5 of final consumption accelerated and increased by 4.8% YoY. Non-profit institutions serving households recorded a 3.9% increase. The slowdown in growth in the final consumption is solely attributed to the Covid-19 outbreak, which resulted in a lockdown in late Q1 (mid-March). The mentioned lockdown had a significant impact on reduced household consumption in the last two weeks of Q1, which was partially offset by higher general government spending.
Gross fixed capital formation rose by 3.1% YoY, reflecting slight slowdown compared to the previous quarters, however quite a significant slowdown compared to Q1 2019 when gross fixed capital formation observed a sharp increase of 11.5% but that could be due to several one-off events back then.
In Q1, the trend of exports and imports did not continue from the last quarters where exports growth accelerated, and imports growth decreased. What occurred in Q1 was a decrease both in imports and exports of goods and services by 5.8% and 3%, respectively. Such figures do not come as a surprise, given that international trade was basically put on hold in the last 2 weeks of March (due to the Covid-19 outbreak).
To be specific, the decrease in exports was solely driven by lower exports of services of -9.4% (which account for 28.4%) of total exports. Such a result was partially offset by a slight increase of exports of goods (+0.3%). The decrease in imports was mainly driven by a sharp decrease in imports of services, which recorded a drop of 25.1% YoY.
Croatian GDP, Real Growth Rates (%, YoY)*
*Quarterly Gross Domestic Product, seasonally adjusted real growth rates