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Photograph: Freeimages.com/Dominik Gwarek

The Zagreb-based Institute of Economics has revised upward its forecast of Croatia's economic growth from the previous 1.3% to 1.5%, and this revision has been spurred by fresh data showing a 1.6 percent growth in 2015 and favourable trends in the Coincident Economic Index of the Institute of Economics (CEIZ).

Having in mind a 1.5 percent growth rate of GDP in 2015 and favourable indicators in the CEIZ index as well as data on industrial production in January 2016, analysts of the Institute of Economics announced continued positive growth rates of 1.5% in 2016 and 1.8% in 2017, according to the latest edition of Croatian Economic Outlook Quarterly.

"After six consecutive years of declining activity, Croatian GDP rebounded in 2015 and recorded a positive growth rate of 1.6 percent, still far from pre-crisis growth levels, but nonetheless an important turnaround for future prospects. Based on newly released data for 2015, we have slightly revised our forecasts for real GDP growth rates for 2016 and 2017 upwards to 1.5 and 1.8 percent. Unlike in recession years, domestic demand is expected to have a positive contribution to GDP growth, as was the case in 2015," the Institute said on its web site.   

"Although the initial effects of personal consumption increase due to tax changes have subsided, real disposable income is permanently increased. As oil prices are expected to stay moderate throughout 2016, and government spending on public sector wages and pensions is also likely to remain stagnant, while consumer optimism is improved due to a long-awaited recovery of domestic activity, our forecasts for personal consumption growth are now at 1.4 and 1.5 percent for the current and the following year."

"In the final quarter of 2015, investment activity declined by 0.1 percent (measured by seasonally adjusted figures on a quarter-to-quarter basis). This was, however, not enough to offset relatively high growth rates in the first three quarters, so the year of 2015 as a whole recorded investment growth of 1.6 percent. In the first and the second quarter of 2016, we forecast a slight fall in investments, due to the prolonged formation of government and uncertainties regarding the budget for 2016, but investments should then bounce back in the second half of the year. Hence, our new growth forecasts stand at 1.9 percent (down by 0.2 percentage points) for the current year and 3 percent for the following year. "

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