Croatia’s economy contracted for a sixth quarter as the euro region’s record recession prompted further declines in personal consumption and investment.
Gross domestic product fell 1.5 percent from a year earlier between January and March compared with a 2.3 percent drop in the previous three months, the statistics office in the capital, Zagreb, said today in a preliminary estimate. The median forecast of four economists in a Bloomberg survey was for a 1.6 percent contraction.
Croatia, which joins the European Union on July 1, hasn’t posted economic growth since 2008, with foreign direct investment slumping last year to almost a fifth of 2008’s $4.2 billion. The nation is counting on 10 billion euros ($13 billion) in EU funds through 2020 to reignite expansion through infrastructure and tourism investments.
“A slower fall in industrial production and personal consumption contributed to a softer decline in GDP,” Alen Kovac, chief economist at the Croatian unit of Erste Group Bank AG (EBS), said by phone.
The yield on Croatia’s dollar-denominated bond maturing July 2020 climbed to 4.743 percent at 11:08 a.m. in Zagreb, the highest since April 18. The cost of insuring the debt with five-year credit-default swaps, which rises as perceptions of creditworthiness worsen, advanced to 296 basis points from 295 yesterday.
The economy will grow 0.7 percent this year after shrinking 2 percent in 2012, the government predicts. The European Commission said May 3 that GDP will drop 1 percent in 2013 as domestic demand continues to ebb, while net exports will provide “limited support” in 2014, when the economy will expand by 0.2 percent.
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