July 14 (SeeNews) - The European Commission said on Thursday it expects Croatia's gross domestic product (GDP) to expand by a real 3.4% this year, affirming its projection made in May, and lowered to 2.9% its GDP growth projection for next year from 3.0% forecast this spring.
“The growth profile in 2022 is set to be shaped mainly by domestic demand, to which private consumption and investments are expected to provide similar contributions. Despite rising inflation, private consumption is expected grow solidly given the accumulated savings, favourable labour market developments and a strong tourist season,” the Commission said in its Summer 2022 Economic Forecast.
In 2023, domestic demand is set to continue to be the main driver of growth in Croatia, supported by stronger private consumption in an environment of stabilising inflation and accelerating investments.
On the other hand, the contribution of net exports in 2023 could turn negative due to rising pressures on imports and somewhat weaker demand than previously expected in main trading partners, according to the EU forecast.
The Commission has increased its inflation forecast for Croatia for 2022 to 8.2%, compared to 6.1% in spring, strongly affected by higher than expected energy and processed food prices. In 2023, inflation should decelerate to 3.6%.
The Croatian central bank on Wednesday forecast a real GDP growth of 5.5% this year and 2.5% for 2023. The central bank expects an inflation rate of 9.4% in 2022 and 4.6% next year.
Croatia's economic output grew by a real 10.2% in 2021, after a contraction of 8.1% in 2020. The inflation rate in the Adriatic country reached 2.7%.