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ZAGREB (Croatia), November 27 (SeeNews) - Croatia's gross domestic product (GDP) grew by a real 2.9% year-on-year in the third quarter, meeting the expectations of analysts at Austria-based Erste banking group for a 3.0% increase, Erste said on Wednesday.
Erste is, however, fine-tuning its full-year 2019 GDP forecast to 3.0%, from the previously expected 3.2%, with balanced risks, and confirming its forecast for next year's growth at 2.5%, Erste said in an instant comment after the country's statistical office published first estimate for third-quarter GDP earlier on Wednesday.
"Coming to the outlook, domestic demand footprint should remain fairly robust. Private consumption remains backed by positive trends on the labour market (both on employment and wage side), consumer sentiment and credit and inflation outlook," Erste said.
Investments are expected to grow in the high single-digits, backed by favourable tourism developments, stronger EU funds absorption and thanks to favourable interest rates. Exports should remain a key growth driver in 2020 as well, even though net exports contribution would remain in red as domestic demand continues to put pressures on the imports side, Erste said.
Concerning the third-quarter performance, Erste said it saw limited surprises on the domestic demand side with private consumption keeping solid trace, while investments came in slightly weaker than anticipated.
"Trade balance figures painted more positive net exports contribution vs. 1H19, still 3Q19 data came in stronger than anticipated as exports grew 4.7% y/y (vivid 7.1% on goods side and solid 3.1% on services), while imports were up mere 1.1.%, allowing for approx. 2.5pp positive net exports contribution to headline figure," the bank analysts said.
The Croatian economy expanded by a surprising 3.9% on the year in the first quarter of 2019 and cooled down to a 2.4% annual increase in the second quarter, according to earlier released official data.
In October, the central bank slightly lowered its 2019 forecast for Croatia's economic growth to 3.0% from the previously anticipated 3.1%, on expectations for stronger domestic consumption and weakening foreign demand.
The revision is in line with the latest estimates of the World Bank, the International Monetary Fund, the European Bank for Reconstruction and Development and the European Commission, which expect Croatia's economy to grow by 2.9%-3.0% this year. They predict growth of 2.5% to 2.7% for Croatia in 2020.