Key facts
- Croatia's GDP grew 2.2% year-over-year in Q1.
- Quarter-over-quarter GDP growth was flat.
- Growth fell short of forecasts from HNB, EC, and market analysts.
- Domestic demand was the sole driver of economic growth.
- GVA growth eased to 2.1% year-over-year.
Croatia's Gross Domestic Product (GDP) expanded by 2.2% year-over-year in the first quarter, a rate significantly slower than anticipated by the Croatian National Bank (HNB), the European Commission (EC), and market observers. The quarterly growth figure stagnated, failing to meet the projected 0.1% increase by the HNB and the 0.6% by the EC. The deceleration in economic activity was attributed to a sole reliance on domestic demand, as Gross Value Added (GVA) growth eased to 2.1% year-over-year. Key sectors contributing to this growth included public administration and defence, education, wholesale and retail trade, transportation, storage, accommodation, and food service activities. Analysts anticipate that GDP growth will continue to moderate throughout the year due to persistent headwinds from geopolitical tensions, weak economic performance in Europe, and subdued foreign demand.