Croatia’s annual industrial turnover growth slows to 3.4% in April

Croatia’s annual industrial turnover growth slows to 3.4% in April
Industrial turnover growth in Croatia has slowed dramatically following the Agrokor crisis
By bne IntelliNews June 27, 2017

Croatia's industrial sales rose by 3.4% y/y in April, deescalating sharply from a 15.2% increase in the previous month, preliminary working-day adjusted data from the statistics office showed on June 27.

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 has been posting annual industrial turnover growths during the five months period to April after CPI turned to inflation in December.

Annual growth in industrial sales came despite contracting industrial production in March and April, and also despite slowing annual CPI inflation in April.

In January-April as a whole, industrial turnover grew 7.6% y/y. The biggest increase in industrial sales in the first four months was posted by the energy sector where sales jumped 70% on the year due to rising oil prices. A 10% y/y increase was registered in sales of capital goods while sales of consumer durables rose by 8% y/y in January-April. Non-durable consumer goods posted a 1% annual rise in January-April, while sales of intermediate goods rose 3.5% on the year.

Industrial sales on the domestic market rose by 5% y/y in the first four months of 2017, whereas sales abroad went up 11% compared to the same period of 2016. Seasonally and working day-adjusted industrial sales contracted by 7% m/m in April after posting a 7% monthly growth in March.

Croatia's working-day adjusted industrial output posted an annual decline of 0.6% in April after recording a revised decline of 0.1% in March. Industrial production in Croatia registered annual increases for 25 consecutive months until March. However, problems related to the debt crisis at retail giant Agrokor seem to have started curbing industrial production growth in the last two months.

The European Commission said in its Spring 2017 Economic Forecast said that industrial production in Croatia had deteriorated in Q1, particularly in the consumer goods segment, possibly due to the distressed situation at food and retail giant Agrokor. 

Croatia's consumer prices rose 1.1% y/y in May, decelerating from a peak point of 1.4% increase in AprilIn December, Croatian consumer prices posted the first annual increase of 0.2% since June 2015.

Annual industrial producer price inflation in Croatia slowed down from 2.9% y/y in April to 1.8% y/y in May.

The Croatian Central Bank (HNB) forecasts that annual CPI 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.

The three–year disinflation period is behind Croatia, and average 2017 CPI inflation might reach 1.9% y/y in 2017, according to Raiffeisen Bank.

Labour costs in the Croatian industrial sector grew by 7% y/y in Q1, following a 4.3% y/y growth registered in the last quarter of 2016.

Data

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