Producer prices of industrial products on the domestic market grew by 30.8% YoY in June 2022. As expected, the growth in the Energy segment was still by far the largest driver, and if we were to exclude it from the calculation, the growth would amount to 9.9% YoY.
The Croatian Bureau of Statistics (DZS) has published a monthly report on the changes and developments recorded by the industrial sector, and in particular, the industrial producer prices. In the report, we can see that the producer prices of industrial products on the domestic market increased by 30.8% YoY, and 0.8% MoM. Energy still remains the main driver of this growth, and if we were to exclude it from the producer prices, then the growth would be 9.9% YoY, and 0.9% MoM.
As the current geopolitical situation around the world is putting a lot of pressure on prices, especially commodities (gas and oil in particular) and by extension, energy prices, the trend of growth in producer prices is unlikely to stop. Considering this is only one factor that is influencing this, with wider inflationary pressures from the supply chain disruptions that we witnessed in the last year, year and a half, combined with the ever-growing recession fears, again, the trend of growth is unlikely to stop, as none of these issues have a permanent solution on the horizon.
If we were to look at the producer prices growth by segments, on an MoM basis, prices in Non-durable consumer goods increased by 1.4%, in Durable consumer goods by 1.1%, in Energy by 0.5%, in Capital goods by 0.5%, while in Intermediate goods, a 0.4% growth was recorded. However, if we were to look at the YoY price change, the picture is a lot more profound. PPI in the Energy segment increased by 90%, in Intermediate goods by 11.5%, in Non-durable consumer goods by 10.2%, in Durable consumer goods by 9.9%, and in Capital goods by 4.8%.
Meanwhile, looking at the producer price change by sectors, prices in Mining and quarrying grew by 176% YoY, in Electricity, gas, steam, and air conditioning supply by 42.7%, and in Manufacturing by 17.5%.
Producer prices of industrial products (June 2016 – June 2022, YoY, %)
What is also interesting is the fact that the prices have started spilling over to other segments other than energy. Even though the prices in the Energy segment are increasing the most, by far, if we look at other sectors, we can see prices increasing as well. Of course, all industry requires energy to operate, so a prolonged period of higher energy will have spillover effects. Also considering that supply chains have been really strained for the majority of 2021 and the beginning of 2022, as the majority of the global economies reopened (excluding China). This has increased demand significantly, a demand which the current supply couldn’t cope with. Combined with the sanctions against Russia and the war in Ukraine, both of which are having an impact on a lot of exports from these countries. Exports of oil, gas, wheat, precious metals, but also fertilizers in Russia’s case, and wheat, sunflower, and several precious metals and gases in Ukraine’s case are lacking and this puts even higher pressure on the supply. The fact that China has strict COVID-19 policies in place is also putting a strain on the global supply, as the country is at the same time one of the largest exporters of certain products (precious metals, food), but also one of the largest importers of other commodities, primarily oil and gas. All of these factors combined are among the few of the challenges that are unlikely to get fixed soon. As such, it’s extremely hard to predict how will these prices change, as all of these factors are also increasing the likelihood of a recession, something that could curb demand and as such could “level” the price increase.
At the end of June 2022, the total tourist arrivals in Croatia amounted to 2.83m, which is an increase of 84% YoY. At the same time, tourist overnight stays amounted to 14.8m, which is an increase of 85% YoY.
The Croatian Tourist Board (HTZ) has published its latest report on the changes and developments recorded by the Croatian tourism industry, for June 2022. In the report, we can see that the trend in the tourism industry is really positive, with high double-digit growth recorded both in terms of arrivals and overnight stays.
The total tourist arrivals in June amounted to 2.83m, representing a growth of 84% YoY. Breaking this down further, foreign tourists accounted for the vast majority of arrivals, at 2.51m or 88%, which is an increase of 105% YoY. On the other hand, the remaining 328.8k of tourist arrivals are domestic tourists, which recorded a slight increase of 3% YoY. Considering that the measures back in June 2022 were a lot more lenient for domestic travel than international travel, this is to be expected. As Croatia gets ready for the main summer season months, these numbers are really encouraging, especially considering the geopolitical situation in the EU as well as the war in Ukraine and its geopolitical implications and impacts.
Moving on, tourist overnight stays also recorded noteworthy increases, with the total tourist nights amounting to 14.8m, which is an increase of 85% YoY. Out of this, foreign tourist nights were again the majority, at 13.4m or 91% of the total. On the other hand, domestic tourist nights amounted to 1.41m, which is an increase of 5% YoY. This also means that there has been an increased average stay per person, at 5.24 nights per person, which means that since February, the average stay increased by 84%.
Total tourist arrivals and tourist nights in Croatia ( January 2019 – June 2022)
Taking a look at the tourist nights by country of origin, German tourists constituted the vast majority of tourist nights, at 30%, followed by Austria and Slovenia, with 9% each, Poland with 7%, and Czechia with 6%. In total, these countries’ tourists amounted to 61% of the total tourist nights, meaning that the vast majority of arrivals are from the Central European region. At the same time, looking at the most visited counties, Istra had the most arrivals and overnight stays, at 822.3k and 4.84m, respectively, followed by Splitsko-dalmatinska, Kvarner, and Dubrovačko-neretvanska.
Finally, taking a look at the period from January – June 2022, foreign tourist arrivals amounted to 4.63m (+2.7x YoY), while domestic arrivals amounted to 1.13m (+1.3x). Meanwhile, foreign tourist nights amounted to 21.5m (+2.3x), while domestic tourist nights amounted to 3.35m, an increase of 23% YoY.
So having all of this data in mind, how does this compare to the record 2019 numbers? In terms of total tourist arrivals, June 2022 recorded app. 9% less compared to June 2019. If we were to break this down into domestic and foreign arrivals, domestic arrivals are 9% higher, while foreign arrivals are 11% lower. In terms of total tourist nights, however, the numbers are a lot better. June 2022 recorded only 1% fewer total tourist nights than June 2019. Out of this number, foreign nights were -1% lower, while domestic nights were -5% lower.
Considering the current geopolitical situation and inflationary pressures, one wouldn’t expect the trends to be so positive. As July marks the beginning of the main summer season in Croatia, all the factors are pointing towards a very strong opening. This is especially true if we consider the fact that even with fewer arrivals, the number of tourist nights compared to 2019 was only 1% lower, meaning that on average, tourists spend more overall time in Croatia. With the importance of the tourism industry to the overall Croatian economy, the numbers we see are really encouraging.