Due to the COVID-19 pandemic, many countries had to take measures to mitigate its economic consequences. The measures for restricting the economic activities and the movement of people 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.
The first estimate shows that the quarterly GDP decreased in real terms by 10.0% in the third quarter of 2020, as compared to the same quarter of 2019. This is a slightly milder decrease than in the second quarter, when it amounted to 15.4%. In the summer period, the easing of measures to prevent the spread of the COVID-19 pandemic led to a slight recovery of many activities. Despite the fact that the Republic of Croatia opened its state borders and thus enabled the entry of foreign tourists and the usual tourist activity, the decline in tourist traffic was still significant due to restrictions on movement in other countries and great uncertainty.
| 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 7.6% in the third 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, and Accommodation and food service activities. However, an increase in Information and communication activity partly mitigated a potential larger decrease in GVA.
After the measures taken to close and restrict the performance of a part of economic activities in March and April 2020, a decline in service activities followed. Although there were positive changes after the easing of epidemiological measures from May onwards, the level of services provided is still well below the level of the period before the impact of the pandemic.
The pandemic had a strong impact on the decline in tourism activities, which were the greatest in the third quarter. The number of tourist arrivals and nights in commercial accommodation establishments fell significantly in the summer months compared to the same period of the previous year, especially the number of arrivals and nights of foreign tourists.
Following the sharp decline in the second quarter, industrial production shows signs of recovery in the third quarter. The activities that recorded an increase in the third quarter of 2020 were the following: Manufacture of chemicals and chemical products, Manufacture of basic pharmaceutical products, Manufacture of fabricated metal products, Manufacture of computers and electronic equipment, Manufacture of other transport equipment and Electrical power generation.
In the third quarter of 2020, household consumption declined by 7.5%, which was a somewhat milder decline than in the second quarter.
The impact of the COVID-19 pandemic on global economy was also reflected in a large decline in trade flows between the Republic of Croatia and other countries. Due to the decline in travels, traffic and other business-related services, a significant decrease is also noticeable in the export of services. The import of services, especially from the most important foreign trade partners from the European Union, also decreased significantly. The situation in foreign trade in goods is slightly more favourable than in the second quarter.
The decline in total investment was mostly due to the decline in investment in the business sector, especially in the investment in equipment. An even greater decline in economic activity was slightly mitigated by the growth in government spending.
