The Croatian Employers' Association (HUP) on Friday commented on Croatia's GDP growth in Q1 2022, saying that positive indicators were grounds for optimism about the rest of the year but that inflation, a significant slowdown in trade growth and a drop in industrial production call for caution.

The national statistical office (DZS) on Friday released its first estimate, according to which Gross Domestic Product (GDP) rose by 7% year-on-year in Q1 2022. This is slower growth than in the previous quarter, when the GDP jumped by 9.7%, but also the fourth consecutive quarter of economic recovery.

HUP said that Croatia continued to record high growth rates despite certain challenges, primarily in the form of increased inflation pressures.

At an annual level, Croatia is growing faster than the EU and euro area average, which further shows that the record growth rate in 2021 was not just due to a low reference base, that is, recovery from a steep decline caused by the COVID-19 pandemic, but that there were foundations for sustainable economic growth.

“It remains to be seen how much they will be endangered due to the escalation of the conflict in Ukraine and the sanctions against Russia, that is, due to a significant rise in prices in all segments — from energy, raw materials and transport to basic food products,” HUP said in the comment.

HGK welcomes above-average growth

The Croatian Chamber of Commerce (HGK) also commented on the GDP.

An above-average growth of GDP in Q1 will definitely ensure favourable economic activity until the end of the year, the HGK said, adding that the improvement of the institutional framework and further tax relief for the economy must not be left behind, as they are necessary for sustainable strengthening of economic activity.