Industrial production in Croatia fell by 0.7 percent in August compared to the same month last year, which is a smaller decline than expected, but it does not indicate an improvement in the industrial situation.
The Croatian Bureau of Statistics announced today that in August, industrial production, according to seasonally adjusted data, weakened by 1.3 percent compared to July and 0.7 percent compared to August last year. This is a smaller decline in production than in July, when it weakened by 1.8 percent year-on-year, and smaller than expected. Five macroeconomists who participated in a Hina survey expected, on average, that industrial production in August fell by 0.9 percent compared to the same month last year. “This data indicates somewhat stronger demand than in previous months, but it is also affected by the base effect and inventories. However, it is still too early to talk about signs of recovery in domestic industry. The structure of the domestic economy has not changed. Namely, the economy is not export-oriented, so the recovery of our foreign trade partners, especially in the eurozone, does not have a significant impact on the revival of our industry. At the same time, domestic demand is still low, so the decline in production is not surprising,” says Zrinka Živković-Matijević, director of the Economic Research Directorate at Raiffeisen Consulting.
According to DZS data, energy production increased by 4.6 percent year-on-year in August, and the production of non-durable goods for general consumption increased by 1.6 percent. The production of intermediate goods stagnated, while other segments of production, according to GIG, recorded a decline year-on-year. Thus, the production of durable goods for general consumption fell by 12.4 percent, and capital goods by 7.6 percent. “Although this is a slowdown in the decline of industrial production, we still cannot talk about recovery. It is possible that production has hit bottom, but what concerns me is the possibility of stagnation, as I do not see sufficiently strong domestic or foreign demand to initiate a new cycle, given that the recovery of demand during the summer is seasonal due to the tourist season, while investments are still lacking,” says Zrinka Živković-Matijević. Overall, in the first eight months of this year, industrial production, according to seasonally adjusted data, fell by 2 percent compared to the same period last year. “By the end of the year, industrial production could record slight growth. However, this will not be due to structural changes in the economy, but rather the previous sharp decline in industrial production and the replenishment of company inventories. I fear prolonged stagnation,” concludes Zrinka Živković-Matijević. (H)
