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2023/03/10 / Erste Group Research

Uncertainty remains, but risk profile looks more balanced

The economy remained in solid gear in 4Q22 (4.0% y/y), owing to the supportive investment and public consumption profile, alongside the weaker private consumption footprint and net exports turning red. On the annual level, we saw robust 6.3% growth, with the breakdown showing more support from consumption and tourism earlier in the year, but remaining balanced overall in terms of the structure. For 2023, we keep our call at 1.0%, seeing the risks as far more balanced (even slightly positive), owing to the somewhat fading EU recession risks and a bit more encouraging inflation trajectory at the beginning of 2023.

Inflation seems to have peaked in 4Q22, while YTD inflation figures are pointing to a mere +0.2% m/m (Jan-Feb; Feb-23 11.9% y/y), as one takes one-off euro adoption fears into account. We continue to see gradual moderation ahead, as the base effect kicks in and the supply and demand side gets some support from supply-chain and commodity prices ahead. We see average CPI close to 7.5%, with risks looking balanced. The government got a large chunk (EUR 1.85bn) of fresh funding on the local market with ample support for the local retail investor base. Yields predominantly reflected global factors, while spreads held steady close to the 150bp mark.

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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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