July 23 (SeeNews) - Croatian think-tank Institute of Economics Zagreb (EIZ) said it is lowering its forecast for economic growth in the second quarter to 4.0% year-on-year based on data for April and May, from 4.7% expected previously.
The previous forecast was made in June when the April reading of EIZ's Coincident Economic Index, CEIZ, recorded its highest value since the end of 2016, EIZ said in a statement on Monday.
The May reading, however, was 1.01 index points lower month-on-month with all index components declining in seasonally adjusted values compared to April. At the same time, compared to May 2018, CEIZ was up by 0.57 index points.
"Based on such developments, it can be concluded that the economic activity in May weakened compared to April. However, regardless of the May decrease in index value on a monthly level, it could be expected that, on the basis of developments in April and May, annual GDP growth in the second quarter of 2019 will amount to 4.0 percent, which is 0.1 percentage points higher than GDP growth in the first quarter," economic think-tank said.
Still, EIZ noted that it will have to wait for the CEIZ value in June in order to analyse the second-quarter business cycle with greater certainty.
The CEIZ index aims to provide timely information on the current business cycle conditions. Its value changes simultaneously with the business cycle, thus serving as an indicator of the present state of the economy.
Croatia's statistical office will release first data on second quarter GDP at the end of August.
Earlier this month, the chief economists at Croatia's top five banks increased their 2019 economic growth forecasts up to 3.0% from previously expected 2.6%, following the better than expected GDP growth of 3.9% in the first quarter of the year.
Croatia's central bank also raised in July its 2019 economic growth forecast to 3.1% from 2.5%-2.7% expected previously, saying the investment growth of both public and private sectors is expected to continue coupled with higher domestic consumption.
The revisions are in line with the latest European Commission forecast, which also lifted its projection for Croatia's 2019 economic growth to 3.1% from 2.6% predicted earlier, pointing to domestic demand as the main growth driver.
The Croatian government expects that the country's economy will grow 2.5% this year, slightly decelerating from 2.6% expansion in 2018.