The economy took a greater-than-expected hit in the second quarter amid the Covid-19 fallout, with GDP declining for the first time in six years and at the sharpest pace since data collection began in 1995. Both private consumption and fixed investment plunged due to containment measures, while exports sank by over a third as the vital tourism industry was crushed amid travel restrictions. Turning to the third quarter, available data paints a mixed picture. Both industrial production and retail sales continued to contract in July, while the unemployment rate remained elevated. Nevertheless, economic sentiment jumped to a five-month high in August on a broad-based improvement across sectors, except construction. Meanwhile, although tourist arrivals reportedly gained pace in July–August, the recent rise in Covid-19 infections could weigh on gradually recovering activity.
Croatia Economic GrowthThe coronavirus outbreak and associated restrictions will plunge the economy into its deepest downturn in nearly three decades this year as it suppresses activity. The crucial tourism sector will be pummeled and face even stronger competition as the travel industry gets back on its feet, while domestic demand will shrivel on income losses and elevated uncertainty. FocusEconomics panelists forecast the economy to shrink 9.2% in 2020, which is down 0.5 percentage points from last month’s estimate, and to expand 4.9% in 2021.
Croatia Economy