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• We at Fitch Solutions have revised up our real GDP growth forecasts for Croatia from 4.6% to 6.5% for 2022, down from 10.2% in 2021. This reflects a strong rebound in the tourism industry, which accounts for 20% of GDP.
• However, we forecast that growth will slow to 2.0% in 2023 (down from a prior 2.5% projection), owing to high

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• Following stronger than anticipated real GDP growth in Croatia of 10.4% in 2021, we forecast a deceleration to 3.2% in 2022. This is down from a prior 3.8% projection owing to less favourable base effects and a challenging macroeconomic backdrop.
• We have raised our 2022 average inflation forecast from 3.5% prior to the invasion to 6

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• At Fitch Solutions, we expect the Covid-19 pandemic to continue posing challenges to the Croatian government over 2022, with policymakers seeking to mitigate constraints on the economy while aiming to curb the spread of the virus.
• Pandemic-related restrictions will likely remain a source of public discontent over the coming months

Key View

• We at Fitch Solutions have raised our estimate for Croatia's 2021 real GDP growth to 9.2%, from 7.1% previously, and have lowered our 2022 forecast to 4.2% (from 4.4% previously).
• We expect growth of private consumption and exports, which saw sharp rebounds in 2021, to moderate over 2022 as base effects from the 2020 lockdowns fade

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• At Fitch Solutions, we expect that the Croatian National Bank (HNB) will maintain a stable exchange rate against the euro over the remainder of 2021 and 2022, satisfying one of the convergence criteria set by the European Central Bank (ECB) for joining the monetary union.
• We expect inflation to moderate over the coming quarters from

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• We forecast real household spending in Croatia to post growth of 4.4% over 2022. While this is lower than the 7.5% growth estimated in 2021, the Covid-19 pandemic resulted in a significant contraction in consumer spending over 2020, creating a low base from which 2021 could grow.
• Both retail sales and consumer confidence look to be

Key View

• We forecast real household spending in Croatia to begin its recovery in 2021, growing by a projected 5.2% y-o-y. We note that the economic impact of the Covid-19 pandemic did create a significantly low base from which to grow from. This recovery will extend into 2022, where total household spending will surpass that in the pre-Covid

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• We expect the Croatian National Bank will continue to maintain the stability of the Croatian kuna against the euro.
• Croatia has several tools to ensure currency stability with ample reserves, covering 9.3 months of imports and with the extension until March 2022 of the euro liquidity swap line with the European Central Bank that was

Key View

• We at Fitch Solutions expect Croatia's current account balance to return to a surplus in 2021 after swinging into a deficit in 2020 for the first time in seven years.
• The main driver will be a recovery in the services balance as income from tourism rebounds from multi-year lows during the Covid-19 pandemic.
• However, at a forecast 0