Croatia's GDP could rise by 2.6% in real terms in 2023, and by 3% in 2024, while inflation, after the 2023 rate of 8.4%, could slow down to 4% in 2024, Croatian Central Bank (HNB) officials said at the bank's annual press briefing on Tuesday.

The central bank thus revised down this year’s GDP forecast, and revised up next year’s growth forecast, lowering the inflation rate forecast for both years.

The HNB last published estimates of GDP trends in mid-September, when it forecast a 2.9% GDP growth in 2023 and a 2.6% growth in 2024.

According to the previous forecast, the growth of inflation measured by the Harmonised Index of Consumer Prices, was estimated at 8.8% in 2023 and at 4.7% in 2024.

A summary of the HNB’s macroeconomic projections shows that while recovery in the euro area has been delayed until the start of 2024, somewhat stronger growth is expected for Croatia. GDP in the euro area is expected to grow by 0.6% in 2023 and by 0.8% in 2024.

The expected growth in Croatia reflects stronger household consumption, which after going up by 2.9% in 2023 should accelerate to 3.9% in 2024, according to the central bank’s forecasts.

Inflation in Croatia in 2023 is lower than expected despite higher energy prices while in 2024 price inflation is expected to drop for all components.

In the euro area inflation in 2023 should be 5.4% and in 2024 2.7%, with the HNB noting that higher inflation differential in the euro area is increasingly due to energy price inflation. However, the cumulative growth of inflation is higher in central and eastern European countries, the HNB says.