ZAGREB: Croatia's economy grew 1.2 percent in the second quarter year-on-year, the state statistics bureau said in its flash estimate on Friday, beating expectations and lifting hopes for full-year growth after a long recession. Analysts' forecasts were an average 0.7 percent, compared with first quarter growth of 0.5 percent year-on-year.
"This is certainly a positive surprise driven by stronger household consumption and exports. I expect a similar figure in the third quarter, thanks to tourism, so on the annual level we could see growth of close to one percent," Splitska Banka analyst, Zdeslav Santic, said.
This year looks set to be the first year of growth after six years of recession shaved some 13 percent off Croatia's overall output but analysts are not convinced that one of the weakest EU economies has laid foundations for higher growth in the future.
"Croatia first needs to overhaul its economy and make it competitive to be in a position to expect higher growth rates. We've yet to see if the new government will implement necessary reforms," Hypo Group Alpe Adria analyst, Hrvoje Stojic, said.
Croatia faces a parlimentary election by early 2016 and in most opinion polls the conservative opposition is ahead of the ruling centre-left coalition whose capacity for reforms has been too feeble to push the economy strongly forward.
Analysts say Croatia, which is struggling with a high public debt of about 90 percent of gross domestic product, urgently needs to improve its investment climate and the efficiency of its costly public sector.
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