Movement of the CEIZ Index Suggests Strong Growth of Croatian GDP

Movement of the CEIZ Index suggests strong growth of the Croatian GDP in the second quarter of this year, by 14.5 percent compared to the same quarter last year, announced on Tuesday by the Economic Institute Zagreb (EIZ).

The CEIZ index increased by 11 index points in May of this year compared to the same month in 2020. At the same time, the average value of the index for April and May of this year (i.e., for the first two months of the second quarter) was as much as 15.2 index points higher compared to the same period last year when the economy was largely closed due to the implementation of epidemiological measures, EIZ states.

If we observe April and May of this year by index components, compared to the same period last year, all four components of the index recorded higher values –  revenue from the state budget from value-added tax, the index of industrial production volume, retail trade turnover, and the number of tourist arrivals. Annual growth rates ranged from 15.6 percent, which is how much industrial production increased during the mentioned period, to as much as 323.7 percent, which was the increase in the number of tourist arrivals, they emphasize.

"The described movement of the index suggests that economic activity measured by quarterly GDP change rates in the second quarter of 2021 is accelerating significantly compared to the same period last year. Based on the movement of the index values, we can estimate that in the second quarter of 2021, the Croatian economy will grow by 14.5 percent compared to the same quarter of the previous year. The movement of the index also suggests that the quarterly GDP change rate in the second quarter will also be positive and should amount to 1.2 percent," the analysis states.

EIZ also notes that conclusions about the state of the business cycle in the second quarter of this year can only be made with a higher degree of confidence once the values of the CEIZ index for June are published.

The CEIZ index is a coincident economic indicator, or a monthly composite indicator of the business cycle developed at EIZ, and its purpose is to provide timely information about the current state of the business cycle, which is why the value of the CEIZ index changes simultaneously with changes in the business cycle.

This index is a single-number indicator of the business cycle that contains information that would otherwise need to be collected by analyzing a large number of different economic series, and unlike the time series of quarterly GDP, the CEIZ index provides a monthly assessment of the state of the economy, thereby providing more precise information about changes occurring over shorter periods.

The CEIZ index is available one to three months before the publication of quarterly GDP data, which allows economic policy makers and the interested public to timely monitor economic trends, EIZ notes. 

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