The Croatian central bank (HNB) said on Friday that the 0.7% year-on-year decline in Croatia's GDP in Q1 was better than the point estimate but that it was also in line with its forecast about a relatively strong recovery of the national economy.

The state statistics bureau said earlier on Friday that Croatia’s GDP in Q1 2021 was 0.7% down compared to Q1 2020.

HNB analysts also said that the asymmetric effects of the pandemic, which has strongly affected the services sector, continue to significantly hamper the assessment of current real economic activity trends since the usual monthly indicators such as industrial production, retail trade or construction, show trends in activities that have not been significantly impacted by the pandemic and have therefore recorded more favourable movements than the overall economy.

HNB analysts in April revised the estimate of GDP growth this year up, to 5.9%.

The HNB also noted that Croatia is one of the “few EU countries which in Q1 2021 saw very favourable current trends, which can be explained with a sort of break between the second and third waves of the pandemic as well as the seasonally low activity in the segment of the services sector that has been hit hard by the pandemic.”