Sept. 20 (Bloomberg) -- Croatia’s economy contracted for a third quarter as personal consumption, exports and industrial production declined amid Europe’s debt crisis.
Economic output fell 2.2 percent in the second quarter of the year from a year earlier, the statistics office in Zagreb said today, more than a preliminary estimate of 2.1 percent released on Aug. 31. Gross domestic product dropped 1.3 percent from the three months through March.
“We see a negative trend in all the main categories, such as consumption, foreign investment and industrial production, as Europe’s crisis continues and domestic exports, particularly in the shipping industry, have declined,” Alen Kovac, chief economist at Erste Banka d.d., a unit of Austria’s Erste Group Bank AG, said by phone before the report.
The Adriatic Sea nation, which is set to become the European Union’s 28th member in July 2013, is struggling to revive the economy after three years of recession and stagnation. Industrial output declined 5.5 percent in August from a year ago while retail trade contracted 5.1 percent in July after falling 5.1 percent in June and 7.3 percent in April.
“We expect revenue from tourism to soften the decline in the third quarter, and predict GDP will contract 1.8 percent for the year,” Kovac said. “Modest growth” of 0.5 percent to 1 percent is expected for 2013, he said, amid a rebound in foreign demand and government measures to boost investment.
The government on Aug. 2 reduced the 2012 growth forecast to stagnation, citing the effect of Europe’s debt crisis. The eight-month-old Cabinet of Prime Minister Zoran Milanovic wants to attract investors with 8 billion kuna ($1.4 billion) from EU funds and reconstruction banks for infrastructure and energy projects.
The World Bank estimated Croatia’s economy will shrink 1 percent in 2012, while the central bank on July 9 revised its forecast to a 1.6 percent contraction from a 1 percent decline predicted in May.
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