Croatia's main employers' group HUP said on Friday that the summer tourist season had failed to make up for the big losses incurred during the pandemic lockdown earlier this year and that 2020 year-end GDP drop would exceed government's 8 pct projection. Meanwhile, the Chamber of Commerce HGK commented on official figures released on Friday saying that the GDP shrank 10 percent in Q3 2020, adding that 'the situation was bad but in line with global trends.'
They were commenting on the State Bureau of Statistics’ forecast that GDP in Q3 decreased 10% year on year. It was the second quarter in a row that GDP had fallen, which means the economy has gone into a recession for the first time since 2014. The fall was smaller than in Q2 when the economy contracted by a record 15.4% as a consequence of a COVID-19 lockdown.
HUP said that despite a major relaxation of COVID restrictions in Q3, Croatia was the EU member state with the largest GDP decrease annually and that in terms of recovery from Q2, it was in the bottom half of the ranking.
In light of the new restrictions for businesses, the decrease in Q4 will most probably be even larger than in Q3, so this year’s real GDP decrease could be close to 10%, as forecast by the European Commission, HUP said.
It is encouraging, however, that some sectors, such as information and communications, agriculture, construction and real estate, are registering growth, it added.
In order to avert a complete collapse which would impact the entire society, including the public sector, it is necessary to find a way to maintain business in other sectors as well. Potential compensation measures are only temporary and additionally affect public finance, and only by keeping all sectors in business can we expect a recovery in 2021, HUP said.
The HGK said that thanks to the tourism season, Q3 was more important than other quarters as it generated 28% of the annual GDP and 40% of annual exports.
A 10% annual GDP decrease shows that this is a bad year for the Croatian economy but in line with expectations and the effects of the pandemic as well as global and EU trends, it added.
All EU member states are affected by the pandemic, decreases in domestic and foreign demand, and declines in consumption. According to Eurostat, the savings rate in the EU in Q2 jumped to 23.9% from Q1, the highest quarterly level since the beginning of 2008, while the investment rate was the lowest and the consumption-per-capita fall the largest, the HGK said.