Page 44 - SE Outlook Regions 2023

International institutions have slightly more positive expectations for the
Croatian economic growth, putting it at around 1%.

The European Commission noted that persistently high inflation,
negative real wage growth and a decline in business and consumer
confidence are expected to lead to a technical recession in the last
quarter of 2022 and the first quarter of 2023.

In 2023, although energy and commodity price growth are set to
moderate, economic growth will slow down due to the subdued real
disposable incomes, particularly in the first half of the year. In the
second half of the year inflation is expected to moderate and real wage
growth should resume, which would push up economic activity.

Fitch Ratings expects Croatia’s growth to “lose steam” in the coming
quarters as a result of inflation affecting domestic demand and a
slowdown in its key trading partners, primarily the eurozone. It therefore
anticipates growth will slow to just 1.1% in 2023, despite an expected
rise in public investment because of the higher absorption of EU funds.

On a more positive note, the World Bank has projected that Croatia’s
economy will perform better in 2023, posting growth of 1.8%. The
International Monetary Fund (IMF) has the most optimistic forecast of
all, forecasting Croatia’s 2023 economic growth at 3.6%.

According to the latest available statistics office data, Croatia’s
economy continued the strong growth from 2021 into the third quarter
of 2022, expanding by 5.2% compared to the same period a year
earlier. However, the growth rate slowed down compared to the
previous quarter when GDP expanded by a revised 8.7% y/y.

In 2020, the Croatian economy was badly hit by the coronavirus
pandemic and lockdowns — which had a strongly negative impact on
the country’s large tourism sector — but picked up in the second
quarter of 2021 to end the year with a better-than-projected 10.2%
growth.

44 SE Outlook 2023 www.intellinews.com