Finance Minister Zdravko Maric said on Friday that the latest report saying Croatia's Q1 2021 GDP shrank year-on-year 0.7 percent is "in line with the government's forecasts," noting that "statistics for Q2 2021 would certainly be positive," state agency Hina reported.

Maric said that the GDP drop in the first quarter of 2021 was the smallest rate of decline in the last four quarters, since the outbreak of the coronavirus pandemic.

“If we compare Q1 this year with the last quarter of 2020, we can see that it grew by 5.8 percent,” he said. He added that the government had expected a GDP decline of around 1.0 percent in Q1.

Analyzing individual GDP components, he said that they were all “more or less slightly above expectations.”

“Personal spending dropped by 0.4 percent. Some will say that this is surprising considering that retail trade grew more than 4 percent in the same period. But we can see now that a decrease in personal spending is mostly due to a drop in services,” he said, explaining that he was referring to a decline in services in the domestic catering sector, transport, and other services, as well as the drop in imports of services.

He noted that investments had been growing at a solid rate for the second consecutive quarter, going up by more than 4 percent in Q1 2021, which, he said, is a “good indicator of future developments.” Commodity exports, too, grew for the second quarter, by more than 8 percent. At the same time, service exports as well as service imports saw a significant drop.

Commodity and service exports dropped by 0.9 percent on the year, with commodity exports going up 8.3 percent and service exports sinking by 18.6 percent. Commodity and service imports dropped by 2.1 percent on the year, with the import of commodities going up by 1 percent and the import of services dropping by 19.7 percent. Gross investments in fixed assets grew in Q1 2021 by 4.6 percent on the year, as did government spending, by 0.2 percent on the year.

“As for the entire year, we stand by our projection of 5.2 percent GDP growth. And considering the estimate of a 6.7 percent GDP growth in 2022, that would put us in a position to achieve the pre-crisis 2019-level of GDP level already in 2022,” said Maric.

He noted that it had taken Croatia 11 years to overcome the previous crisis caused by the global recession of 2008, and that this time recovery would happen much sooner “on the condition there were no additional unexpected repercussions.”

Comparing Croatia with other EU countries, Maric said that only France, Lithuania and Slovakia saw a GDP increase in Q1, with Croatia being the country with the smallest GDP decline in that period. The EU GDP dropped by 1.8 percent on average in Q1.

Maric noted that Spain and Portugal, countries which like Croatia have an above-average share of services in GDP, notably tourism, and a similar structure of the economy, saw GDP declines of 4 percent and more than 5 percent respectively.

Speaking of the tourist season, Maric said that if the current positive trends were maintained, with a growing vaccination rate, one could expect this year’s tourist season to be better than last year’s.