Croatia's industrial sales rose by 15.3% y/y in March, escalating from a 3.4% increase in the previous month, preliminary working-day adjusted data from the statistics office showed on May 29.
Croatia’s industrial production has been on an upward trend during the last two years, supported by the recovery in both domestic and foreign demand. However, ongoing deflation in the Adriatic country was spurring industrial turnover growth. Croatia started to post high industrial turnover growth after CPI turned to inflation in December. Significant growth in industrial sales came despite stagnant industrial production in March.
In Q1 as a whole, industrial turnover grew 9.2% y/y. The biggest increase in industrial sales in the first quarter was posted by the energy sector where sales jumped 113% on the year due to rising oil prices. A 17% y/y increase was registered in sales of capital goods while sales of consumer durables rose by 8% y/y in the quarter. Non-durable consumer goods posted a 1% annual rise in Q1, while sales of intermediate goods rose 3% on the year.
Industrial sales on the domestic market rose by 6% y/y in the first three months of 2017, whereas sales abroad went up 16% compared to the first quarter of 2016.
Seasonally and working day-adjusted industrial sales also jumped by 10% m/m in March after posting a limited 1% monthly growth in February.
Croatia's working-day adjusted industrial output remained unchanged in March compared to March 2016 after registering annual increases for the previous 25th consecutive months.
European Commission said in its Spring 2017 Economic Forecast that industrial production in Croatia deteriorated in Q1, particularly in the consumer goods segment, possibly due to the distressed situation at food and retail giant Agrokor.
The Croatian Central Bank (HNB) forecasts that annual inflation will increase to 1.6% in 2017. In February, the European Commission hiked its average inflation forecast for 2017 to 1.7%, comparing favourably with the -0.9% in the Spring Forecast.
In April, the IMF also revised its 2017 average CPI inflation forecast to 1.1% from 0.8% in October. The fund forecasts CPI inflation will rise to 0.8% at end-2017.