ZAGREB (Croatia), July 7 (SeeNews) – The European Commission said on Wednesday that it expects Croatia’s real gross domestic product (GDP) to increase by 5.4% in 2021 and by 5.9 % in 2022.

“This is a slightly faster-than-expected recovery in the spring, largely due to strong first quarter performance and high-frequency positive indicators for the outlook for consumption, construction, industry and tourism, “said the Commission in the European economic forecast for summer 2021.

In the Spring 2021 edition, the EU executive forecast GDP growth of 5.0% for this year and 6.1% for 2022.

“Since the spring, restrictions related to COVID-19 have been further relaxed based on the improvement in the health situation, which is in part due to the resumption of vaccination rates,” he explained.

Consumer confidence and other high-frequency indicators continued to improve through May, suggesting a resumption of strong economic performance in the second half of the year. Preliminary data shows that job creation is on the rise in the hospitality, IT and construction sectors, which is in line with the good performance of investment data. Investment growth is expected to accelerate over the forecast horizon, supported by the stimulus and resilience plan, according to forecasts.

The tourist season in the Adriatic country is expected to remain well below 2019 levels, but significantly stronger than last year. As a result, service exports are expected to show strong growth. Merchandise exports are also expected to perform well, driven by strong demand from major trading partners.

Croatia’s GDP contracted 8.0% last year.

After stagnating in 2020, prices started to rise again in 2021, largely driven by rising energy prices. While annual inflation of the Harmonized Consumer Price Index (HICP) reached 2.4% in May, core inflation remained rather subdued at 0.4%, the Commission noted. In the future, inflationary pressures are expected to come from services and processed foods. Overall, the HICP is expected to increase by 1.5% this year and by 1.3% in 2022. Last year, the average HICP was stable over the year, while in 2019 it was 0.8%.

In the Spring 2021 edition, the Commission forecast for Croatia an average HICP growth rate of 1.3% for 2021 and 2022.