Croatia is in recession Prime Minister Zoran Milanovic announced May 31, following information from the national statistics institute that said the economy slowed by 1.3% in the first quarter compared to same period last year.
"Croatia is formally in recession, following two quarters of negative growth," Milanovic said after a government meeting, AFP reported. In the fourth quarter of 2011, GDP dropped 0.4% compared to the same period in 2010.
"Europe is in crisis, the situation is not easy. We will have to get by while we wait for a recovery in Europe, as certain dominant branches of our economy depend on Europe," said Milanovic, adding that his government would work to boost investments to try and reverse the negative trend.
Croatia has been more or less continuously in recession since 2009. After registering a 6.9% drop on GDP in 2009, it reported a 1.2% decline in 2010 and last year the economy stagnated.
In a comment, Erste bank said the flash estimate landed above their and market expectations (-2.0% and -2.1% respectively) showing a more benign picture than anticipated but with two consecutive quarters in red confirming technical recession. The bank is keeping their forecast for 2012 at -1% of GDP.
Erste also said that going into the 2Q they do not expect any rebound, actually expecting some private consumption deterioration and ongoing investments weakness. "2H12 is expected to bring some stabilization, supported by tourist season in 3Q and some stabilization on investments side amid government efforts to support investment cycle. Our call for 2012 GDP remains -1% with negative risks being somewhat dampened on today' better than expected reading," the bank's analysts said.