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 activities 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 (GDP). Data show that the pandemic has largely led to a slowdown in Croatian economy since mid-March 2020. Although the spread of the disease did not significantly affect economic indicators in January and February 2020, the impact of the pandemic has been present since March 2020, that is, since the first quarter of 2020.
The first estimate shows that the quarterly GDP decreased in real terms by 15.1% in the second quarter of 2020, as compared to the same quarter of 2019. It is the largest decline in quarterly GDP in real terms since 1995, when quarterly GDP started being estimated. The real decline was recorded in all components of GDP on the expenditure side, except in the general government consumption, which recorded a slight increase.
| X-axis | 2008 crisis | 2020 crisis |
|---|---|---|
| -1 | Q3 2008 | Q4 2019 |
| 0 | Q4 2008 | Q1 2020 |
| 1 | Q1 2009 | Q2 2020 |
| 2 | Q2 2009 | Q3 2020 |
| 3 | Q3 2009 | Q4 2020 |
| 4 | Q4 2009 | 1Q 2021 |
The first estimate shows that the quarterly gross value added (GVA) decreased in real terms by 11.9% in the second quarter of 2020, as compared to the same quarter of 2019, based on non-seasonally adjusted data. The quarterly decline in GVA was recorded in most of the activities and it was mostly influenced by Wholesale and retail trade, Transportation and storage, Accommodation and food service activities, as well as Manufacturing. A positive contribution came from Information and communication, Public administration and Construction.
The decline in the production of services in the second quarter of 2020 was the result of the measures taken to close and restrict the performance of a part of economic activities in March and April 2020. Although there were positive changes after the loosening of epidemiological measures in May and June 2020, the level of service production is still well below the level of the period before the impact of the pandemic.
Commercial accommodation establishments recorded an increase in tourist arrivals and nights in January and February 2020, as compared to the same period of 2019, but there has been a sharp decline in tourist arrivals and nights since March 2020, especially of foreign tourists. Due to the loosening of quarantine measures in the Republic of Croatia and other countries, since June 2020, there have been positive changes in tourism. A similar trend is confirmed by the 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 second quarter of 2020 despite the circumstances are the following: Manufacture of chemicals and chemical products, Manufacture of basic pharmaceutical products and Manufacture of petroleum products.
Household consumption decreased by 14.0% in the second quarter of 2020, which is the largest quarterly decrease so far. The latest figures in retail trade show a decline in the volume of retail sales in all types of stores, except in stores with food, technical equipment, pharmacies and in sale via internet.
The impact of the COVID-19 pandemic on global economy has led to a large decline in trade flows between the Republic of Croatia and other countries. As regards the export of services, a significant decline was recorded in travels, traffic and other business-related services. Travel restrictions implemented globally have also significantly reduced tourist traffic. Due to the closure of world economies and a fall in demand, the import of goods has been reduced significantly, especially the import from the most important foreign trade partners from the European Union. The decline in total investment was mostly due to the decline in investment in the business sector, especially in the investment in equipment.
