Croatia's industrial production fell in March 2022 for the first time in 15 months, indicating a slowing of the economic recovery.

Industrial production decreased by 2.6% from February 2022 and by 1.9% from March 2021, the state statistics bureau said on Friday. Year-on-year decreases were observed in four of five sectors, with production of capital goods decreasing the most, by 6.7%.

Production of energy fell by 4.0%, of non-durable consumer goods by 3.3% and of durable consumer goods by 2.3%, while production of intermediate goods increased by 2.3%. In the first quarter of this year, industrial production rose by 1.7% year on year.

Production and economic growth might slow down this year because of the economic impact of Russia’s military invasion of Ukraine.

“According to our expectations, the modest positive growth rate for this year, considering geopolitical developments, is exposed to negative risks. The recovery of external demand will be more modest given the potentially unfavourable impact of current geopolitical conflicts and the dependence of some of Croatia’s most important trading partners on Russia. On the other hand, the low base effect will have a positive impact,” analysts at Raiffeisenbank Austria (RBA) said in their comment on the report.