Croatia's economy recovering faster than expected

Croatia's GDP growth of more than 16% in Q2 2021 shows that the country's economy is recovering faster than expected, and that confirms that the government has responded strongly to the crisis, ensuring economic stability in the current pandemic, Prime Minister Andrej Plenković said on Friday.

The Croatian Bureau of Statistics (DZS) on Friday published its preliminary estimate showing that GDP in Q2 grew by 16.1% from the same period of 2020.

This is the first time the country's GDP has grown after going down for four consecutive quarters and it has grown at the highest rate since 1996, when the national statistical office started collecting those data. In 2020 economic activity contracted by 8%.

The government said in a statement that Croatia's GDP growth was significant also in relation to current Eurostat data, the fifth highest in the EU, after Spain, France, Hungary and Italy. Together with Hungary, Croatia also has the fifth fastest growth among countries of Central and Eastern Europe.

"The fact that Croatia now has more employed persons than before the COVID-19 crisis proves that we have switched from the job-retention phase to job creation. Croatia's approach to balancing measures for public health protection and the economic sector has proven effective, as evidenced also by results of the tourist season, which are beyond expectations. The government is committed to reforms and investments envisaged by the National Recovery and Resilience Plan as well as to the reconstruction of earthquake-struck areas. Close to €25 billion that has secured from the EU for the next decade will be a strong lever of Croatia's economic development," Plenković said.

Economic growth in Q2 2021 is owing to the growth of all GDP components, mostly personal consumption as its biggest component. DZS data show that household spending in Q2 grew by 18.4% from Q2 2020, after going down by 0.3% in Q1. The export of goods and services rose by 40.9%, owing to the significant recovery of tourism-related services.

The government has contributed to the economic recovery and large increase in personal consumption with its job-keeping policy, which has kept the labour market stable, and by continuing the tax reform, which has enabled a further growth of the average wage, the government said.

Croatia's GDP growth in Q2 is higher than the EU average, which stands at 13.2%. In the first half of 2020, the country's GDP grew by 7.7% from the same period of 2020, the government said in its statement.

Text: Hina

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