Industrial production drops while consumer spending continues to grow

According to the latest figures from the Croatian National bank, last year's tourist season set a new record in terms of earnings from foreign tourists. All told revenues totaled €14.6 billion, which is an increase of almost 11.5% when compared to 2022. Additionally, earnings were up by €1.5 billion.

Industrial production fell by more than 5% on an annual basis in February. This marks the third consecutive month of declining industrial production. This is contrasted by a 9.1% growth in retail trade turnover last month, which has seen steady growth since April of last year. Economic analyst Hrvoje Serdarušić says this is due to a high level of optimism in Croatia: “In the last couple of polls, Croatia has had the highest consumer and business optimism in Europe. Given that optimism is very important when it comes to spending and that consumer spending is the biggest factor in GDP growth, we can infer that the rest of this year will continue in this vein, relatively good. Obviously, there exist certain risks. The risks Croatia faces are primarily in the form of some kind of global recession. And knowing the situation, global recessions usually come from the United States.”

Economic analyst Boris Podobnik offers his explanations as to what is driving the increase in consumption in the face of constant and persistent price inflation: “This can be explained by the fact that many countries have gone into recession and we still have not. This is partially because we have started receiving significant help from the European Union. But you know, when people hear that others are in recession and we're not, they continue to spend more than they should out of optimism.”

However, there are those, who are concerned that the declining production of goods and growth in consumer spending is not conducive to a resilient, stable and healthy economy in the long-term.

Meanwhile, according to the Tourism Ministry the record revenues from foreign tourists in 2023 only serves to confirm the growth that was registered throughout 2023, which saw particularly good results in the pre and postseasons. The Tourism Ministry concluded that it is also very happy with the indicators for the beginning of 2024.

Source: HRT