According to the first estimate, in real terms, the Croatian GDP grew by 2.8% YoY and amounted to EUR 16.7bn. Meanwhile, seasonally adjusted quarterly GDP in real terms increased by 2.6% YoY and 1.4% QoQ in Q1 2023.

Looking at the first estimates for the Croatian GDP, released on Monday by the Croatian Bureau of Statistics (DZS), the Croatian GDP grew by 2.8% YoY in real terms during Q1 2023. In terms of the seasonally adjusted quarterly data, in real terms, the GDP increased by 2.6% YoY, and 1.4% QoQ. This means that in Q1 2023, it amounted to EUR 16.7bn.

Breaking the components of the GDP a bit further, on a YoY basis, in Q1 2023 final consumption expenditure increased by 1.5%, and amounted to EUR 10.8bn. Inside this category, Households recorded growth of 1.4%, while the General government increased by 2.2% amounting to 2.8bn. Gross fixed capital formation increased by 3.9% YoY, amounting to EUR 2.9bn, while Exports of goods and services grew by 4.8% YoY, amounting to EUR 5.6bn. Imports of goods and services slightly declined by 0.8%, amounting to EUR 8.1bn, implying that exports have continued to grow while imports are declining.

Households still contribute the majority of the Croatian GDP, comprising 61% of the total GDP. In our previous quarterly estimates, we were concerned about the potential of a “real income squeeze” for households, however, the estimate numbers have given us relief that it might not be as harsh. Investments have demonstrated solid growth at 3.9% YoY, and we believe they can still reach our previous projection of 5.5% for FY 2023.

In this estimate, we can see the Croatian GDP is still showing promising growth. Even with the uncertain macroeconomic outlook, exports of services have shown phenomenal growth with a 9.1% YoY increase, outpacing the growth of all other constituents. Financial/insurance and professional activities have recorded respective 8.7% and 7.9% YoY increases. Construction and real estate activities have followed with 4.6% and 4.8% growth rates, respectively. The GDP estimates have shown us some very encouraging data, as the growth rate has outpaced our previous projections for the quarter and should quell any fears of entering a technical recession, at least in the short term.

Croatian GDP growth (YoY, %)*

Source: Croatian Bureau of Statistics, InterCapital Research

*Quarterly Gross Domestic Product, seasonally adjusted real growth rate

By the end of April 2023, BET increased by 1.3% MoM, amounting to 12,267.59 points. Compared to the start of the year, it grew by 5.2%.

The Bucharest Stock Exchange has published the latest trading activity report, for April 2023. In terms of the highlights, the Stock Exchange notes that all of the indices were in the positive territory, with BET-TR (total return) index increasing by 5.2% YTD, while the energy and utilities index, BET-NG, increased by 10.5%. In terms of the main index on the exchange, BET, it grew by 5.2% since the start of the year, while on an MoM basis, it increased by 1.3%.

BVB also notes that the total value of listings in the first 4 months of 2023 exceeded EUR 1bn, which is significant considering the volatility that we have seen in the international capital markets. In terms of equity turnover, it recorded a significant decline MoM of 62.1%, amounting to RON 454.5m. Meanwhile, on a YoY basis, it declined by 11.4%. During April 2023, only 18 working days were recorded, which would mean that the average daily turnover amounted to RON 25.2m.

Performance of BET constituents in April 2023 (MoM, %)

Source: Bloomberg, InterCapital Research

In terms of the performance of the BET constituents, the largest increase on an MoM basis was recorded by Transgaz, whose share grew by 7.9%, followed by DIGI at 7.6%, Purcari at 7.5%, OMV Petrom at 5.3%, Sphera Franchise Group at 4.6%, BRD at 4.4%, and MedLife, at 4.2%. On the flip side, the largest decrease was recorded by Romgaz, which lost 2.1% of its value, followed by Banca Transilvania at 1.8%, and Fondul Proprietatea at 1.2%. In total, out of the 20 members of the index, 13 recorded positive returns in April, while 7 recorded negative returns. Of course, April was not only the month when the majority of the dividend proposals were already made, but also when the majority of the GSM meetings, and thus dividend approvals were made. As such, the results were surely under the influence of this, besides the obvious macroeconomic situation and developments.

YTD performance of BET constituents in 2023 (%)

Source: Bloomberg, InterCapital Research

On a YTD basis, the story is more positive. The largest increase was recorded by BVB, whose share increased by 33.1%, followed by Aquila at 27.2%, Transgaz at 22.1%, and SFG at 21.8%. In total, half of the index constituents recorded >10% returns in this period, while 17 recorded positive returns, and only 3 companies, BRD, Banca Transilvania, and One United Properties recorded decreases, of 4.6%, 3.9%, and 2.3%, respectively.

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