In the April edition of the Croatian Economic Outlook Quarterly, analysts of the Zagreb-based Institute of Economics say that judging by available indicators, the recession continued in the first quarter of 2011, but that they expect a mild recovery later this year which could result in a 1.3 percent GDP growth and that next year GDP growth could reach 2.4 percent.
The employment rate is expected to continue to go down, while the recovery of the labour market could begin in 2012.
The inflation rate is expected to go up at a faster pace and interest rates will go down a little, the analysts say.
Croatia's Gross Domestic Product in the fourth quarter of 2010 was down 0.6 percent on the year. Economic activity in 2010 was down 1.2 percent.
Deseasonalised data on GDP movements show that the drop in activity in the fourth quarter followed after a significant growth in the third quarter, which basically annulled the first signs of the recovery and postponed the end of the recession period.
Furthermore, the first economic indicators for the start of this year are not encouraging either: Industrial production and activity in the construction sector are going down, retail sales are stagnating and export growth has slowed down, the analysts said.
Forecasts for the rest of the year are nevertheless somewhat more favourable. "A mild recovery is expected, encouraged by more favourable movements in the investment sector and partially in personal consumption, as well as by a growth in exports of commodities and services, notably in the tourist sector. GDP growth this year is projected at 1.3 percent and at 2.4 percent in 2012," the analysts say, adding that the closure of Croatia's EU entry talks will help in the development of this scenario.
The external debt is not expected to cross the limit of 100 percent of GDP, the analysts say.
The average unemployment rate could amount to 18 percent this year, and next year it could go down to 17.6 percent.
The Croatian Economic Outlook Quarterly is an English-language periodical that provides an analysis of recent macroeconomic trends and gives a short-term forecast. It is published on a quarterly basis.
