The Croatian economy shrank for a fifth consecutive year in 2013, registering a GDP drop of 1.0%, even though the government was hoping that a modest growth of 0.2% would put an end to the lasting recession. Last year's decline, however, slowed down from the 2.0% contraction in 2012.
The 2013 GDP drop figure was released in a flash estimate by the statistics office on Feb 28. The office also said the economy declined by a real 1.2% y/y in the fourth quarter of last year.
According to the expenditure approach, the decreasing exports of goods had largest contribution to the economic decline in both Q4 and in full 2013. Croatia's trade deficit widened 4% to HRK 51.44bn (some EUR 6.7bn) in 2013 as the 6% drop in exports offset the 2% decline in imports.
On the other hand, the drop in imports of goods and services had a positive impact on the GDP performance last year.
According to the production approach, the manufacturing sector had the largest contribution to the GDP drop in Q4 and full 2013. The manufacturing output shrank 3.7% last year, contributing to the 2% drop in overall industrial production. The sector of accommodation and food service activities, on the other hand, had the largest positive impact to the economy in 2013 thanks to the good tourism season.
As far as this year's outlook is concerned, the government recently cut its 2014 GDP growth estimate to 0.2% from 1.3% due to the lower government and household spending, while the EU says it expects the Croatian economy will rise by 0.5%. Ratings agency S&P, however, said in January it expects the five-year recession to continue in 2014, with GDP declining by 0.5%.
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