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2023/09/15 / Erste Group Research

GDP outlook affirmed, resilient inflation pressures

Solid momentum in 1H23 has been confirmed by the 2Q GDP figures as the economy expanded 1.1% q/q (s.a.) and 2.7% y/y. Domestic demand kept up a supportive tone, with private consumption showing some acceleration and investments holding ground. Export and import volumes shrank due to the goods side, while services continued to expand, again yielding a positive net export print. We affirm our call at 2.6% for 2023, Domestic demand should remain supportive, with a recovering real income and EU-funded investment profile. Tourism support should fade to an extent amid a higher base, while the relatively weak EU growth outlook weighs on external demand.

In recent months, inflation moderation slowed down considerably (August 2023, 7.9% y/y), reflecting ongoing pressures in food and service segments and forcing an upward revision of average inflation towards 8%. The fiscal position remains in check, as the budget performance remains supported by strong nominal GDP growth, suggesting limited fiscal risks for 2023 and allowing fiscal space for anti-inflation or some pre-election spending. Yields and spreads mostly moved in a narrow band, former suggesting 10Y rate slightly below 4%, with the latter sticking in the expected 130-140bp region.

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General information

AuthorErste Group Research
Product nameCEE Country Macro Outlook
Topic in focusFX, Macro/ Fixed income
Economy in focusCroatia
Currency in focusCroatian Kuna
Sector in focus-


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