In April, consumption fell by eight percent

In April, according to data released today, consumption in Croatia fell by 8 percent compared to the same month last year, which is a larger decline than expected, and also greater than a month earlier.

The Croatian Bureau of Statistics announced today that retail trade turnover, generated by all business entities engaged in this activity regardless of their primary activity, was nominally 7.8 percent and real 8.0 percent lower in April than in the same month last year. This is a significantly larger decline than anticipated, as five macroeconomists surveyed by Hina estimated that the decline in retail trade turnover in April would average 4.3 percent. This is also a larger decline than in March, when consumption fell by 2.8 percent, which was its smallest decline in 19 months, during which the trend of weakening consumption has lasted. “These data show that there is still a high level of consumer pessimism and a low level of domestic demand. It is evident that due to negative trends in the labor market, the overall real disposable income is decreasing, and it seems that the population is only meeting basic living needs, while postponing all other purchases for better times.

This is also indicated by the stagnation of banks’ credit activity towards the population,” says Zrinka Živković-Matijević, director of the Economic Research Directorate at Raiffeisen Consulting. In recent months, real wages have also been decreasing. Thus, in March, the average net salary amounted to 5,359 kuna, which is a real decrease of 1 percent compared to the same month last year. “As long as there is no recovery or at least stabilization in the labor market, an increase in disposable income cannot be expected, and thus no strengthening of consumption. For now, it is clear that negative trends continue, so considering this consumption data, as well as recent sharp declines in industrial production in April, we expect a decline in gross domestic product of 2.6 percent in the second quarter. Improvement in consumption could only occur in the second half of the year if the abolition of the crisis tax slightly boosts consumer optimism and if the tourist season is good,” concludes Zrinka Živković-Matijević, director of the Economic Research Directorate at Raiffeisen Consulting. (H)