Research Detail
| 2023/06/20 / Erste Group Research |
GDP forecast receiving bump, inflation reverts to single-digit zone Against late-2022 concerns, the start of the year confirmed that the economy remains in decent shape, with GDP expanding 2.8% y/y. Domestic demand, both private consumption and investments, maintained a supportive tone, while the net exports drag diminished. Looking ahead, compared to earlier, we are a tad more optimistic on private consumption support (real wages turned positive in 1Q23) and tourism performance (strong pre-season and good booking). Investments remain backed by EU funding, while the exports outlook remains bleak overall. Thus, along with the better than anticipated 1Q23 outlook, we are upgrading our FY23 GDP call to 2.6%. Inflation reverted to the single-digit region in 2Q23 (May-23 at 7.9% y/y) owing to the unwinding base effect and supportive energy component. Average inflation is seen as landing just below 7%, although some risks remain amid the uncertainty of a more supportive supply chain and commodity price trends feeding into the figures. Croatia keeps fiscal diligence on track, running a budget surplus in 2022 and targeting the budget gap at a mere 0.7% of GDP in 2023. The MoF also moved to mitigate financing risks by tapping the market with a EUR 1.5bn Eurobond in June. Yields moved relatively tightly, with the spread finding support in the sub-150bp region. |
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General information
| Author | Erste Group Research |
| Date | 2023/06/20 |
| Language |  |
| Product name | CEE Country Macro Outlook |
| Topic in focus | FX, Macro/ Fixed income |
| Economy in focus | Croatia |
| Currency in focus | Croatian Kuna |
| Sector in focus | - |
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