Financial News: Croatia Economic Growth To Slow - Croatian National

Croatia Economic Growth To Slow - Croatian National Bank

(RTTNews) - The pace of economic expansion in Croatia is set to slow this year and next, due to weaker growth in domestic demand as investments slow, the Croatian National Bank said on Monday.

The Croatian economy grew 3.7 percent in 2024, which was much slower than the 3.3 percent expansion in 2023, the CNB said in its winter macroeconomic projections.

".it is expected that it [growth] could remain relatively strong in the next two years, albeit at a slightly lower level," CNB Governor Boris Vujcic said.

The GDP growth rate is forecast to slow to 3.3 percent this year and further to 3.0 percent next year.

The acceleration in economic growth in 2024 was mainly due to strong domestic demand that was underpinned by favorable developments in the labor market, highly supportive fiscal policy and strong private sector investment activity, the CNB said. Growth is set to slow in this year and next as the intensity of domestic demand growth could weaken, primarily due to investment growth, which, after strong growth supported by EU funds in the past three years, could slow down, the bank said.

The CNB sees the risks to the growth projections as balanced.

Inflation based on the harmonized index of consumer prices, is estimated to have slowed sharply to 4.0 percent in 2024 from 8.4 percent in the previous year. The <a href=https://www.rttnews.com/3501149/croatia-december-inflation-at-8-month-high.aspx target=_blank >HICP inflation</a> is projected to ease further this year to 3.5 percent and then to 2.5 percent next year.

Core inflation that excludes food and energy prices fell to 4.7 percent in 2024. The rate is expected to ease further this year to 2.9 percent and thereafter to 2.7 percent next year.

Risks related to the inflation forecast are broadly balanced, the bank said.

<a href=https://www.rttnews.com/3498936/croatia-jobless-rate-rises-to-5-0.aspx target=_blank >The unemployment rate</a> is estimated to have dropped to 4.9 percent in 2024 and is projected to ease to 4.7 percent this year and to 4.5 percent next year.

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