Latest economic indicators send a mixed message

According to the latest data from the Croatian Tax Administration, consumer spending in Croatia this holiday season reached a record high. At the same time agricultural production hit a new low. And while Prime Minister Plenković and his government have been applauding their economic achievements, it is hard to see how a consumer spending driven economy can provide the resilience of one that is rooted in the actual production of goods.

The Tax Administration says Croatia saw record spending this holiday season. The data shows that consumers spent a total of €3.86 billion, which is 10% more than in December of last year. And while many consumers argue that the higher spending is not a result of citizens buying more but rather a direct result of higher prices, economist Damir Novotny believes that the increased consumption is due to the Croatian mentality and higher salaries: "Croatia falls within the group of countries in southeastern or southern Europe, whose citizens have a stronger propensity to spend than citizens in the countries of northern or central Europe. Croatian citizens themselves are more likely to spend, and if salaries increase spending will increase. The spending is being driven by wage growth. In spite of the growth in prices, wages have obviously grown more."

Whatever, the real reason the amount of money spent over the holidays went up, one thing is clear, the bulk of the spending was not on agricultural goods produced domestically. In fact, according to the latest data, agricultural production in Croatia last year fell by more than 10% when compared to 2024. Indicators show that Croatia has seen a decline in all agriculture sectors since joining the European Union in 2013. Croatia now only covers 40% of its needs, and citizens are eating increasingly more expensive food imported from other countries. Farmer Zdravko Stjepanek says that one of the major problems is the bloated state bureaucracy: "Whatever the case they need to reduce the administration so that every farmer does not have to have three or four people who earn money by monitoring him, but are of no help to him."

Fellow farmer Mirko Laslo says that another problem farmers face is spiraling inflation: "It could be easier if they raised the subsidies, because we see that inflation is somewhere between 5% and 7.8%, and our subsidies are not being adjusted in 2027 or 2028. On the contrary, the EU says it will reduce subsidies by 20%!"

Source: HRT