The State Statistical Bureau is expected to publish today its initial estimates of the GDP for the last quarter of 2017. Most economists that spoke to the press over the past several days expect the growth to slow down below the 3% on the annual level. The average prediction of eight economists, surveyed by the HINA state news agency, is that the GDP for 2017 will grow by around 2.7% compared to the year before. But their estimates range between 2.1% to 3.2%.
This will be the 14th consecutive quarter of growth, but slower than the previous one when the GDP grew by 3.3% on the annual level. This slowdown is, according to the participants in the survey, a consequence of slowdown in personal consumption and stagnation of industrial production.
They all agree that personal consumption is still the strongest component of the GDP growth. Its main indicator, retail sales, continues to grow for 40 months in a row. This is unprecedented in the history of Croatian statistics. However, in the last quarter, the real growth of retail sales slowed down to the annual level of 3.4% from the 5.5% in the previous quarter. This indicates a recent slowdown of personal consumption, which continues to grow on tax reform which allowed real salaries to grow. According to the SSB, the average net salary in legal entities in December was Kn 5,973, which is a growth of 2.3% or Kn 135 on the annual level. At the same time, slower sales were influenced by a steep decline in vehicle sales, probably caused by most people postponing their purchase until after the excise reform expected to lower excise tax on new vehicles in 2018.
Another positive impetus to GDP growth came from growth of exports, primarily based on growing EU economy as the EU countries continue to be Croatia’s main foreign trade partners. Although in the final quarter of 2016 exports grew by 12.6% on the annual level, they did slow down to 7.4% in the last quarter of 2017. Export of goods grew by 12% in 2017, to Kn 103.9 billion total.
But at the same time, imports continued to grow and in the last quarter reached 8.6% more than the year before, or Kn 161 billion total. Total trade deficit thus grew by another Kn 1.3 billion, or 3% annually.
General slowdown is also due to stagnation of industrial production in the last quarter, although in Q3 it grew by 2.9%. Investments in fixed assets grew for the 10th quarter in a row, although slowing down a bit in the last quarter from the 3.4% growth in Q3.
If the overall estimate of 2.7% growth in the Q4 comes true, it would mean that the total GDP growth for 2017 would come to 2.9%, slower than the 3.2% in 2016. The European Commission recently published its estimate of Croatian economy, forecasting overall growth for 2017 at 3.2%. The Croatian National Bank estimates the growth at 3.1%, and the Government based its budgetary planning for 2017 on 3.2% GDP growth.
For now, all economists agree that the Agrokor crisis and its Kn 58 billion debt did not have major impact on the GDP growth although it did have some impact on investments and demand to its suppliers. All in all, foreign demand accounted for growth in exports and tourism services, and a good year overall.
The same eight economists expect the 2018 GDP to grow around 2.8% on average. Their estimates vary from 2.3% to 3%.

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