Croatian Economy Posts 3.4% Growth in Q2

The Croatian economy continued its upward trajectory in the second quarter, expanding faster than in the first, according to data from the State Bureau of Statistics.

Figures released Wednesday show GDP grew by 3.4% year-on-year in Q2, compared to 2.9% in Q1. The main drivers of growth were tourism, VAT revenues, and stronger retail sales.

Finance Minister Marko Primorac said the structure of growth in the second quarter was consistent with previous quarters, led by domestic spending and investments.

“We are seeing an increase in growth driven most notably by two components: household spending, which rose 4% year-on-year, and gross fixed capital investments, which grew by 5.3%. The data is good, significant, and encouraging for the continued expansion of the Croatian economy,” Primorac said.

Erste Bank’s chief economist, Alen Kovač, noted that the 3.4% growth rate was broadly in line with expectations, if not slightly better.

“I’d say it’s somewhat above what analysts had projected. Consumer spending and investments remain the key contributors,” Kovač said.

Josip Tica, economics professor at the University of Zagreb, cautioned that the effects of EU funding for post-pandemic and post-earthquake recovery are beginning to fade.

“The economy continues to grow by inertia. Tourism is expanding and indicators remain positive. However, more and more people are entering the tourism sector—opening apartments and restaurants—while growth in demand is slower than the increase in capacity,” Tica said.

The data also point to a slowdown in construction, while imports grew faster than exports. Analysts now expect Croatia’s economy to expand by no more than 3% this year.