The Croatian Chamber of Economy (HGK) on Wednesday assesses the slowdown in GDP growth in 2017 as a result of the slowdown in the growth of gross investments and exports of services and stronger growth in imports, and that other components of consumption did not grow at a sufficient pace to maintain a higher growth rate.
“The slowdown in GDP growth in 2017 was a consequence of the slowdown in the growth of gross investments and exports of services and stronger growth in the imports of goods and services (especially goods). At the same time, other components of consumption did not grow at a sufficient pace to maintain a higher GDP growth rate, although they grew faster than the previous year,” they say at the Chamber.
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As they note, personal consumption, as the largest individual component of GDP, grew only 0.1 percentage points faster than the previous year, driven by relatively high growth in net wages (5.5 percent, primarily influenced by changes in the income tax system), slight employment growth, recovery in credit activity towards the population, and increased propensity to consume.
Neither did the commodity exports, which with high growth (9 percent, 3.8 percentage points higher than the previous year) remained the component of consumption that had the largest positive absolute contribution to GDP growth, and whose growth was enabled by solid economic growth in the European Union (2.5 percent), our most important export market, bring a greater advantage because it also generated strong growth in imports, warn HGK analysts.
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They explain that, although increased domestic and foreign demand generated growth in the value of domestic production of goods and services, it also generated significant growth in the value of imports, and the overall contribution of trade in goods and services with abroad to GDP growth was negative.
They add that domestic production, measured by the growth of gross value added in individual activities, increased the most in the group of activities that includes trade, transport and storage, as well as accommodation and food service (4.4 percent) and in the information and communication activities (4 percent).
Gross value added in industry increased by only 1.4 percent, and in the last quarter, there was even a decline of 0.2 percent.
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According to preliminary estimates from the DZS, in the last quarter of last year, an annual GDP growth of 2 percent was achieved, weaker than in the previous quarter (3.3 percent) and weaker than in the fourth quarter of 2016 (3.5 percent). Thus, the last quarter lowered the growth rate for the entire 2017 from 3 percent, which it was for the first three quarters, to 2.8 percent, representing a slowdown in economic growth compared to the previous year (3.2 percent).
“This has shown the projections of most analysts who published forecasts during 2017 to be optimistic, including the Ministry of Finance (3.2 percent), the European Commission (3.2 percent), the Croatian National Bank (3.1 percent), and the HGK (3.1 percent),” they conclude at the Chamber.
