On Friday, the Croatian Bureau of Statistics published its first estimate on GDP for Q2 2020 showing that in real terms it decreased by 15.1% YoY (seasonally adjusted data).

Full impact of lock-down of the economy due to Covid-19 pandemic is evidenced in Q2, so the drop is a result of decrease in household consumption expenditure, decrease in foreign investments, decrease in exports of goods and services and decelerated growth of general government spending.

The main contributor to GDP – final consumption – dropped by 10.1% as lock-down was effective in April and part of May and economy started to reopen at the end of May. Spring is usually start of summer season which was not evidenced this year due to restriction of travelling. Therefore, the largest part of final consumption, household expenditure decreased 14.0% YoY, while general government’s expenditure amounting to almost 1/3 of final consumption decelerated and grew slightly by 0.7% YoY. The halt in Croatia and global economies had a full impact on reduced household consumption that has in 1H decreased for 6.40% (at current prices), which could not be offset by higher general government spending that in the same period grew by 5.77% (at current prices).

Due to halt in the economy the investments were also stopped so gross fixed capital formation dropped by 14.1% YoY. This is strong difference to previous quarters when gross fixed capital formation observed growth rates which in turn had positive impact on GDP growth. Due to halt in international trade, the trend from previous quarter persisted so decrease both in imports and exports of goods and services was evidenced, by 28.1% and 40.6% respectively. Due to omission of start of summer tourist season, the decrease in exports of goods and services (-40.6%) was in majority driven by drop in exports of services of -67.4%. Export of services have in Q2 2020 accounted for 30% of total exports (vs. 52% in Q2 2019).

Croatian GDP, Real Growth Rates (%, YoY)*

*Quarterly Gross Domestic Product, seasonally adjusted real growth rates

Comparing Croatia to other EU countries, the drop in GDP in Q2 was somewhat higher in Spain (-22.1%), France (-19.1%), Italy (-17.3%) and Portugal (-16.3%), while it was somewhat lower in Belgium (-14.5%), Hungary (-13.5%), Austria (-13.3%), Slovakia (-12.1%) and Germany (-11.7%). Slovenia will publish its first estimate of Q2 2020 GDP today.