GROSS DOMESTIC PRODUCT

The global health crisis caused by the COVID-19 pandemic has affected the economy of most countries, including the Republic of Croatia. Therefore, countries had to take a number of measures to mitigate the economic consequences of the pandemic. The measures for restricting the movement of people and conducting the economic activity have affected the aggregates of quarterly national accounts as well as the quality and availability of many data sources that are commonly used in estimating the gross domestic product. Data show that the pandemic has largely led to a slowdown in Croatian economy since mid-March. Although the spread of the disease dis not significantly affect economic indicators in January and February, the impact of the pandemic is already noticeable in the first quarter of 2020.

The first estimate shows that the quarterly GDP increased in real terms by 0.4% in the first quarter of 2020, as compared to the same quarter of 2019. The slowdown in GDP growth in the first quarter of 2020 is a result of a slowdown in the growth of household consumption expenditure and of a decrease in exports of goods and services. The first estimate shows that the quarterly gross value added (GVA) increased in real terms by 1.0% in the first quarter of 2020, as compared to the same quarter of 2019, based on non-seasonally adjusted data. The largest contribution to the quarterly GVA growth in the first quarter of 2020 was achieved in Construction, while the largest contribution to the decrease in the volume was achieved in Manufacturing.

Due to the closure of stores in mid-March 2020, sales in some retail sectors declined. At the same time, a strong demand for everyday goods has led to increased sales in retail stores with food and beverages. Due to a high demand for basic pharmaceutical products, sales in pharmacies and drugstores also increased. The significant fall in turnover was partially offset by an increase in the retail sale via Internet. Although commercial accommodation establishments recorded an increase in tourist arrivals and nights in January and February 2020, as compared to the same period of 2019, there was a sharp decline in tourist arrivals and nights in March. A similar trend is confirmed by data from the fiscalisation system.

Due to a partial or full closure of factories and companies in March 2020, there was a decline in industrial production in almost all areas. The activities that recorded an increase in the first quarter of 2020 are the following: manufacture of food products, manufacture of chemicals and chemical products, and manufacture of paper and paper products.

Government spending and investment in construction had a stable effect on the GDP growth rate and prevented its further decline in the first quarter of 2020. Foreign trade in goods, export and import recorded a decline compared to the first quarter of 2019. Compared to the same quarter of the previous year, the labour market was marked by stagnation, contributed by the employment preservation measures adopted by the Government of the Republic of Croatia.

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