The recovery of economic activity accelerated in the first quarter of 2021, but there were indications of deceleration of recovery in April, the Croatian Central Bank (HNB) Council said after meeting on Wednesday. Pročitaj više

The accelerated recovery in the first quarter of 2021 can be attributed to a more favourable epidemiological situation in comparison to the peaks of the second and third wave of the pandemic in Croatia, as well as to the seasonally lower activity of some segments of the services sector, the Council said.

Last month, the state statistics bureau reported that Croatia’s economy contracted by 0.7 percent in Q1 2021 as against Q1 2020 and increased by 5.8 percent compared to the last quarter of 2020.

The indicators now available show that the economic growth slowed down in April compared to the average growth rate for the first quarter.

This mainly reflects the effects of the third wave of the pandemic as well as the seasonal strengthening of the importance of some services vulnerable to the physical distancing measure, the HNB Council said.

The worsened epidemiological situation at the start of Q2 and weakened intensity of the acceleration of seasonal activities halted the favourable trends in the rise of employment and the reduction of the unemployment rate.

The free monetary funds of banks reached a record high in May, as a consequence of the reduction of the kuna-denominated deposits of the central government at the HNB.

The current course of recovery and strengthened optimism have triggered off lending, which accelerated at a rate of 2.6 percent in April after a 2.3 percent rate in March, the central bank said.

Lending to the household sector increased by 3.1 percent in April after 2.2 percent in March, and housing loans picked up. Corporate lending saw mild growth, too.

The central bank also pointed out “strong growth in budget revenues in the first four months of 2021, which exceeded the rise in expenditure.”