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FX.co ★ Croatia Economic Growth To Slow - Croatian National Bank

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typeContent_19130:::2025-01-14T14:23:00

Croatia Economic Growth To Slow - Croatian National Bank

The Croatian National Bank announced on Monday that the economic growth rate in Croatia is anticipated to decelerate in the current and following year, primarily due to a slowdown in domestic demand and investment activity. In 2024, the Croatian economy expanded by 3.7 percent, marking a deceleration compared to the 3.3 percent growth recorded in 2023, according to the CNB's winter macroeconomic projections.

Governor Boris Vujčić emphasized, "...it is expected that growth could remain relatively strong in the next two years, albeit at a slightly lower level." Accordingly, the GDP growth rate is forecast to decline to 3.3 percent this year and 3.0 percent next year.

The uptick in 2024's economic growth was predominantly driven by robust domestic demand, bolstered by favorable labor market conditions, supportive fiscal policies, and vigorous private sector investments, the CNB reported. However, the pace is expected to slow in the coming years, partly due to a decrease in investment growth, which, after being strongly supported by EU funds over the past three years, might decelerate.

The risks associated with these growth forecasts are considered balanced, the Central Bank noted.

Inflation, as measured by the Harmonized Index of Consumer Prices (HICP), is estimated to have sharply decreased to 4.0 percent in 2024 from 8.4 percent the previous year. It is projected to decrease further to 3.5 percent this year and reach 2.5 percent next year.

Core inflation, which excludes food and energy prices, dropped to 4.7 percent in 2024 and is expected to ease to 2.9 percent this year, subsequently reaching 2.7 percent next year. The Central Bank also stated that the risks pertaining to the inflation forecast remain broadly balanced.

Meanwhile, the unemployment rate is estimated to have declined to 4.9 percent in 2024, with projections suggesting a further decrease to 4.7 percent this year, and 4.5 percent in the subsequent year.

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