Croatia’s economy grew by an estimated 2.4% y/y in the second quarter of 2019, a slowdown compared to the 3.9% recorded in the same period of 2018, a first release from the Croatian Bureau of Statistics (DZS) showed on August 28. 

Despite the slowdown, 2Q19 saw the continuation of steady growth that Croatia has achieved for 20 quarters in a row now, after being one of the slowest economies in the region to emerge from recession following the international economic crisis. 

During the quarter, seasonally adjusted quarterly GDP increased by 0.2% compared to the first quarter of this year, and by 2.5% compared to the same quarter of 2018, in real terms, the DZS said.

"[D]omestic demand, driven primarily by growth in personal consumption, and GFCF have contributed positively to growth of the economy while contribution of net foreign demand was negative," Raiffeisen analysts commented in a note. "Additionally, growth of personal consumption is supported by increase of available income as well as movements in the labor market (where the lack of labour force in certain industries creates pressure on wage growth and falling unemployment with somewhat mild employment growth)."

According to the bureau, the largest positive contribution to the GDP volume change in 2Q19 was from an increase in gross fixed capital formation of 8.2%. 

"We stick to our forecast of real 2.8%yoy growth in 2019. The structure of growth will remain the same, widely supported by labour market movements, low interest rate environment and tourism that directly influences the disposable income," according to Raiffeisen analysts. "In addition, construction data clearly reflects stronger investment activity most probably supported by the EU funded projects and the prelection activity ahead of the election year-2020."