A drop in GDP of 15.1 percent has shown that the economy could not withstand another lockdown, the Croatia Employers' Association (HUP) has said, underscoring the importance of preserving jobs, but also providing funds and ensuring liquidity for those hit hardest by the crisis.

The national statistical office (DZS) on Friday released its initial estimates, according to which gross domestic product (GDP) in the second quarter of 2020 fell by 15.1% on the year, its first decline since mid-2014.

The data on the dramatic decline in GDP, released today, have shown how deep the crisis is, and it is important to keep in mind that without the government’s subsidies for preserving jobs and other measures to support the economy, the decline would have been even steeper, HUP said on Friday in a press release.

It is encouraging, it was added, that certain segments of the economy, such the construction industry and the ICT sector saw an increase in activities even in this turbulent period. However, the trade and hospitality sectors, as well as the manufacturing industry and other industries significant for Croatia’s GDP have recorded a decline in activity.

It is not encouraging either, they underscored, that the trade sector continued to register a drop even in July, after retail trade turnover in the first sixth months saw a real decline of over 6%.

HUP underscored that it was positive that the results of the tourism sector in July and August were better than had been expected earlier.

It is difficult to expect a more visible economic growth this year or in the first half of 2021, HUP noted.

“It is necessary that the government continue with the measures to help the economy, in order to preserve jobs, ensure liquidity in the economy and encourage spending and investment. We think that measures should be adopted as soon as possible so that employers can make new decisions on time and know what they can count on. We expect the new measures to be presented in a clear way and preserving jobs to remain a priority. Today’s data have shown that the economy cannot withstand another lockdown,” said HUP’s director general Damir Zoric.

“It is more acceptable for employers to adapt to stricter epidemiological measures than to face complete business closure. With no work or with a constant reduction in work activity we lose more than we can currently withstand. Since a good part of economic activity was either completely suspended or largely limited two-thirds of the time in the second quarter, a dramatic decline in GDP is expected, and we can no longer afford that,” HUP’s press release said.