Croatia 2013 GDP to Contract Less Than Expected, Survey Shows

Croatia’s economy will probably contract less than economists previously expected in 2013 as consumption strengthens and exports are boosted by the euro area’s recovery.

Gross domestic product will contract 0.6 percent this year on an annual basis, according to the median estimate of ten economists in a Bloomberg survey conducted Oct. 18-23, compared with a July prediction of a 0.7 percent contraction. The economy will grow 0.9 percent next year, the survey shows, down from the economists’ earlier estimate of 1.1 percent in July.

The economy of the European Union’s newest member has shrunk more than 10 percent since 2008 as foreign direct investment plunged 80 percent. The Adriatic nation’s economy will expand 0.2 percent this year, the government predicted last month, trimming a previous 0.7 percent forecast.

“Domestic demand in Croatia seems to be making a gradual recovery, supported by low inflation,” William Jackson, a emerging markets economist at Capital Economics, said by e-mail. The recovery will probably remain “weak and fragile, as Croatia’s major export markets include some of the weaker euro-zone countries.”

Economists expect inflation to remain below 3 percent through 2015.

Unemployment in September rose to 19.1 percent, according to the statistics office in Zagreb. The European Commission forecast a 1 percent contraction this year and mild growth in the next.

Before it's here, it's on the Bloomberg Terminal.