Croatia's GDP fell by a real 0.8% in the second quarter of 2014, the statistics office said on September 10, confirming its flash estimate released last month. Thus, Croatia reported the 11th consecutive quarter of economic contraction. The Q2 performance was worse than the 0.6% y/y decline in Q1 and the 0.5% y/y fall in Q2 2013. The Q1 contraction was revised from an earlier estimate of 0.4%.

Seasonally adjusted GDP decreased by 0.3% q/q and by 1.0% y/y in Q2.

Household consumption declined 0.5% y/y and public consumption shrank 3.4% y/y in Q2. The decrease of the gross fixed capital formation was 5.2%. On the other hand, exports of goods and services jumped 7.9% y/y, while imports increased 2.2% y/y. The contribution of domestic demand to GDP growth was negative (2.9pps), while the contribution of net foreign demand was positive (2.1pps). 

The gross value added (GVA) declined by a real 0.4% compared to the same quarter of 2013, the statistics bureau said. A detailed look in the Q2 GDP breakdown shows the decrease was influenced mainly by the drop in construction (-6.7% y/y) and agriculture, forestry and fishing (-3.1% y/y). The biggest growth was registered by the manufacturing sector (+2.7% y/y).

Both the EC and the IMF expect Croatia’s full-year GDP to contract this year, forecasting a GDP fall of 0.6% and 0.8%, respectively, due to low private consumption and investments. Rating agency S&P said it sees the country’s economy declining by a real 0.9% in 2014.