Accelerated GDP growth in Q1 2019 of 3.9% puts Croatia among those EU member states with the most dynamic economic growth, which is important for the further strengthening of Croatia's economy, competitiveness and investor confidence, the government said in a press release on Wednesday.
The preliminary estimate of the national statistical office (DZS) shows that Croatia's GDP in Q1 grew 3.9% from the same period last year.
That is the 19th consecutive quarter to see GDP grow and faster than in the previous quarter when the economy grew by 2.3% on the year. The increase of 3.9% is the highest since Q4 2016 when it increased at a rate of 4.0%.
This achievement is much better than expected as the real growth rate of 3.9% is significantly higher than the 2.5% growth in Q1 2018, the government underlines.
"After exiting the Excessive Deficit Procedure (EDP), accomplishing a budget surplus two years in a row and returning to an investment credit level (Standard & Poor's), an accelerated economic growth in the first quarter of 3.9% puts Croatia among those EU member states with the strongest economic growth in the first quarter, which is important for the further strengthening of Croatia's economy, competitiveness and investor sentiment.
The government perceives this as encouragement to continue to work committed to the triangle of success that comprises fiscal consolidation, structural reforms and investments, which has resulted in an increased income for the population and tax relief for the economy, thus being conducive to strengthening economic growth," Prime Minister Andrej Plenkovic is quoted as saying
The press release from Government House underscored that the export of commodities and services has also significantly contributed to the dynamic GDP growth because last year a real decrease of 0.5% was recorded in Q1 while this year in Q1 it increased by 4.6%.
A growth of 7.5% was generated with regard to exports to EU member states and a dynamic growth of commodity exports was recorded toward CEFTA and EFTA countries and to individual countries including Japan and the USA which resulted in a significant increase in commodity exports of about 9%, the government underscored.
The government added that domestic demand continued its growth which too, exceeded expectations.
The most important contributors to the growth of personal consumption are the rise in net salaries with growth of 3.6% in the nominal terms and 3.1% in the real terms, further positive trends on the labour market (number of pension insurance beneficiaries in Q1 increased by 2.2%), a stronger recovery of credit activities by commercial banks, a VAT reduction on certain food and non-food products and the continuing growth of investment activities.
The government stressed that the contribution of industry on the dynamics of GDP growth.
An increase of 2.7% in industrial production according to the working day adjusted index in Q1, is significantly higher on the year as against Q1 2018 when it grew by 0.3%.
The Q1 growth is on the back of household consumption of 4.4% on the year, as against 3.9% in the previous quarter.
Gross fixed capital formation jumped by 11.5% on the year, while in Q4 2018 it rose 6.1%.