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 7.0% in the fourth quarter of 2020, as compared to the same quarter of 2019. This is a slightly milder decrease than in the third quarter, when it amounted to 10.0%.
| 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 5.8% in the fourth 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, as well as Accommodation and food service activities. However, an increase in Agriculture, forestry and fishing as well as Construction 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. It was particularly affected by the re-restriction of the performance of a part of economic activities at the end of November 2020.
The pandemic also had a strong impact on the decline in tourism activities in the fourth quarter. The number of tourist arrivals and nights in commercial accommodation establishments continued to decline compared to the same period of the previous year. A particular decline was recorded in the number of foreign tourist arrivals and nights.
Following the sharp decline in the second quarter, industrial production continued to increase mildly in the fourth quarter. The activities that recorded an increase in the fourth 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, Other manufacturing and Manufacture of electrical equipment.
In the fourth quarter of 2020, household consumption declined by 4.5%, which was a somewhat milder decline than in the third 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 was slightly more favourable than in the third quarter, which was due to the increase in goods export of 8.6%.
The increase in total investments was mostly due to the increase in investment on Construction activity. An even greater decline in economic activity was slightly mitigated by the growth in government spending.
The first estimate of GDP for the last quarter of 2020 also included a preliminary estimate of GDP for 2020, which indicates a decline of 8.4%. Data show that the decline in economic activity in 2020 is even greater than the one in 2009, which was caused by the global financial crisis.
