Croatia's economic activity continued to increase in the second quarter of 2019, albeit at a markedly lower rate than at the start of the year, and there are indications that real GDP growth might pick up in the third quarter, the Croatian National Bank (HNB) said in a press release from a meeting of its Council on Thursday.

The HNB Council discussed a report on the latest economic and monetary developments and the management of international reserves in the first half of the year.

Real GDP grew by 0.2% in the second quarter compared with the first quarter, while compared with the second quarter of 2018 the real growth rate was 2.4%. The available high-frequency indicators suggest that real GDP growth might accelerate in the third quarter, the central bank said.

It said that employment had continued to grow in the second quarter, while unemployment remained unchanged in relation to the start of the year. Wages also continued to grow.

The acceleration of the annual rise in consumer prices from 0.6% in June to 1.1% in July was mainly due to the increase in the annual rate of change of prices of unprocessed food products and clothing.

The HNB continued to pursue an expansionary monetary policy, easing appreciation pressures on the kuna by purchasing foreign currency from commercial banks in August and further increasing the otherwise high kuna liquidity of domestic credit institutions. In such circumstances financing costs continued to decrease. The annual growth of loans to banks slowed at the end of July, while household loans picked up.

The general government deficit in the first quarter of 2019 was similar to that in the first quarter of 2018, and data from the Ministry of Finance indicate balanced annual growth of revenue and expenditure in the second quarter, the central bank said.