Information on economic trends - September 2018 - HNB
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Information on
economic trends
September 2018CNB • INFORMATION ON ECONOMIC TRENDS • SEPTEMBER 2018 3
Summary
In the second quarter of 2018, economic growth accelerated at both the quarterly and the annual level, reflecting
favourable developments in most GDP components. The available high-frequency indicators suggest that the rise
in real GDP might slow down slightly in the third quarter. In the second and at the beginning of the third quarter,
favourable developments continued in the labour market, although at a slower pace than in early 2018. The annual
consumer price inflation rate dropped from 2.4% in June to 2.1% in July, primarily on account of a significant
decrease in the prices of clothing and vegetables. The CNB continued to pursue an expansionary monetary policy,
maintaining very high levels of liquidity in the domestic financial market. Lending to households continued to grow
in July, while the rise in corporate placements slowed down slightly on an annual basis. The net external debt of
domestic sectors declined by EUR 1.0bn in the second quarter of 2018. In the first quarter of 2018, the general
government budget deficit equalled that recorded in the same period last year (HRK 1.6bn), while MoF data suggest
that in the second quarter revenues grew faster than expenditures on an annual basis.
In the second quarter, real GDP grew by 1.1% from the pre- resulting in an increase in the net inflows into the CES regis-
ceding three months (Figure 1), while its annual growth acceler- ter from employment and other business activities. On the other
ated from the 2.5% recorded in early 2018 to 2.9%. Government hand, removals from the CES register due to non-compliance
consumption and exports of goods and services picked up at the with legal provisions and failure to report regularly continued. In
quarterly level, while imports of goods and services saw a de- July, the drop in the number of unemployed persons accelerated
cline. Personal consumption continued to grow at a similar pace as a result of both new employment and outflows from the CES
as at the beginning of the year, whereas investments stagnated. register on account of non-compliance with legal provisions and
Observed at an annual level, domestic consumption continued failure to report regularly. Registered unemployment fell from
to drive GDP upwards, while net foreign demand contributed 10.0% in the second quarter to 9.7% in July (Figure 15). As re-
positively to overall economic growth, following unfavourable gards wages, in the second quarter of 2018, average nominal
developments seen in the previous two quarters. and real gross wages picked up from the first quarter (Figure
Drawing on the currently available data (Figure 1), the GDP 16). Nominal and real gross wages continued to grow in July,
nowcasting model points to a slowdown in the growth of eco- albeit at a slower pace.
nomic activity in the third quarter of the current year.1 Data on Following a stagnation in June, consumer prices fell by 0.9%
the volume of industrial production for July 2018 indicate a de- in July from June (Table 1). The seasonal decrease in clothing
crease from the preceding quarter’s average. This fall was ob- and footwear prices and the prices of vegetables, mostly more
served in all MIG components on a quarterly basis except in the pronounced than in the same period the year before, contributed
production of energy. Observed according to NCA, the largest the most to the fall in consumer prices. In addition, after three
quarterly drop in production was recorded in manufacturing, months of growth, retail prices of refined petroleum products
the most significant activity in terms of share, with more detailed fell in July as a result of a decrease in the prices of crude oil on
data suggesting that such developments are primarily the result the global market (Figure 19). The price of a barrel of Brent
of a fall in the production of fabricated metal products except crude oil dropped from USD 79 at end-June to USD 70 in mid-
machinery and equipment, food products and chemicals. Real August, mainly under the influence of growing concern over the
retail trade turnover also dropped in July from the average of the global economic outlook and the demand for oil caused by rising
previous quarter (Figure 7). The findings of the Business Con- protectionist measures in trade. On the other hand, the overall
fidence Survey and the Consumer Confidence Survey for July monthly decline in consumer prices was mitigated by a rise in
and August show that business optimism in trade and services the prices of services, in particular by the seasonal increase in
deteriorated from the preceding quarter, mainly due to more un- the prices of accommodation and the prices of refuse collection
favourable expectations regarding demand in the following three and insurance connected with transport. The annual overall in-
months, while business expectations in construction and indus- flation rate dropped from 2.4% in June to 2.1% in July (Figure
try remained at the levels recorded in the preceding quarter. 18), primarily on account of the aforementioned substantial de-
However, consumer confidence improved over the same period crease in the prices of clothing and vegetables. The annual core
relative to the average of the preceding quarter, primarily ow- inflation rate dropped to 0.5% in July after stagnating at 0.7%
ing to improved expectations regarding the financial situations over the previous five months. The annual rate of change of in-
of households and the overall economic situation in Croatia in dustrial producer prices on the domestic market (excluding en-
12 months compared with the current situation (Figure 8). ergy) increased slightly, from –0.1% in June to 0.1% in July, as
The second quarter and the beginning of the third quarter of a result of, among other things, an increase in the prices in the
2018 were marked by further favourable developments in the la- manufacture of metals and the manufacture of wearing apparel
bour market, although not as pronounced as at the beginning of and a slowdown in the decrease of prices in the manufacture of
the year. The rise in employment decelerated in the second quar- food products.
ter as a result of a slower increase in the number of employed Although there had been a considerable fall in early 2018, the
persons in all activities except private sector activities associat- second quarter of 2018 saw a rise of 7.1% in the total exports
ed with tourism, which saw a surge in employment. In July, the of goods relative to the preceding quarter’s average (Figure 10)
number of employed persons stagnated at the level recorded in owing to a rise in energy exports (notably oil and refined petro-
the preceding quarter. The decline in the number of unemployed leum products), as well as in the exports of other goods. The
persons also slowed down in the second quarter as the inflows increase in the exports of the narrow aggregate excluding en-
into the CES register from employment increased from the pre- ergy products (of 3.1%) was affected by the stronger exports
ceding quarter and the employment from the register dropped, of medical and pharmaceutical products, scientific and control
1 See Kunovac, D., and B. Špalat: Nowcasting GDP Using Available Monthly Indicators (WP-39, October 2014).4 CNB • INFORMATION ON ECONOMIC TRENDS • SEPTEMBER 2018
instruments, road vehicles and food products. In contrast, total with the CNB for the purpose of foreign bond repayment. Net
imports of goods went down slightly in the second quarter, by domestic assets (NDA) of the monetary system saw a slight in-
0.4% relative to the average of the preceding quarter (Figure 11) crease in July as a result of the aforementioned decrease in the
in consequence of a sharp fall in the imports of energy prod- central government’s foreign currency deposit, which was partly
ucts (in particular of oil and refined petroleum products). At the offset by an increase in the government’s kuna deposit follow-
same time, the growth in the imports of the narrow aggregate ing the issue of a kuna bond in the first half of July. The annual
excluding energy (of 1.2%) was driven by the increase in the rise in total liquid assets (M4) in July 2018 remained at the level
imports of textile industry products, other transport equipment recorded in June, standing at 5.2%, excluding the effects of ex-
and food products. change rate changes. As regards the components of total liquid
Against the backdrop of increased demand of legal persons assets, the annual growth in money (M1) slowed down some-
for foreign exchange on the domestic foreign exchange mar- what to 19.9% (Figure 48), while the annual fall in quasi-money
ket, the exchange rate of the kuna against the euro depreciated decelerated from 3.0% to 1.8%.
slightly in July and August. At the end of August, the exchange Total placements of monetary institutions to domestic sec-
rate stood at EUR/HRK 7.43, having depreciated by 0.6% from tors (excluding the government) stagnated in July (transaction-
the end of June (Figure 21). The kuna weakened against most based), standing at HRK 221.8bn at the month’s end, with their
of the other currencies of Croatia’s main trading partners, but annual growth rate, unchanged from the preceding month, at
the index of the nominal effective kuna exchange rate was at ap- 4.1% (Figure 40). Annual growth in household placements con-
proximately the same level at end-August as it had been at end- tinued to pick up, reaching 5.7% at the end of July (Figure 42).
June. The weakening of the kuna against the majority of foreign General-purpose cash loans continued to contribute the most to
currencies was offset primarily by the substantial strengthening the growth with an annual growth rate of 10.9% (transaction-
of the kuna against the Turkish lira, reflecting the strong depre- based). As regards the currency structure, kuna placements to
ciation of the Turkish lira on the global foreign exchange market. households continued to trend upwards, in line with their trend
On the European money market, short-term interest rates re- over the years, while foreign currency placements dropped on an
mained in negative territory in July and August. The overnight annual level (Figure 43). The annual growth in corporate place-
interbank interest rate for the euro area, EONIA, ended August ments slowed down to 2.6% (Figure 41) at the end of July, with
at –0.34%, while the six-month EURIBOR dropped to –0.27% an increase seen in lending to all activities except construction
(Figure 24). Risk premiums for most European emerging mar- and agriculture. As for the nominal stock of total placements,
ket economies saw no significant change in July and August. The their annual growth stood at 1.2% at end-July and was signifi-
risk premium for Croatia dropped by 14 basis points in July, as cantly slower than the transaction-based growth, primarily as a
a result of, among other things, the decision of Fitch Ratings to result of the sale of non-performing placements.
upgrade Croatia’s outlook from stable to positive in early July, Following a decline in July brought about by the withdraw-
maintaining Croatia’s credit rating at BB+ for long-term bor- al of government funds from the foreign currency deposit with
rowing. The risk premium for Croatia did not change significant- the CNB for the repayment of a foreign bond, gross interna-
ly in August, ending the month at 97 basis points (Figure 25). tional reserves decreased slightly in August as well, dropping to
The turnover on the domestic interbank overnight market EUR 16.3bn (Figure 56). The decrease in August was predomi-
was negligible in July, with the achieved interest rate of 0.00%, nantly driven by a lower level of agreed repo transactions. Com-
while there was no turnover in August. At the same time, the pared with the end of 2017, gross reserves grew by EUR 0.6bn
interest rate on one-year kuna T-bills without a currency clause or 4.0%. At the same time, net usable reserves increased by
remained unchanged at the level of 0.09% (Figure 28). In ad- EUR 0.9bn or 6.8% from the end of 2017, totalling EUR 14.7bn
dition, one-year euro T-bills were placed with an interest rate at the month’s end.
of 0.00%. Low interest rates on the domestic interbank market After a rise in the first quarter, net external debt of domestic
were a result of the domestic financial system’s abundant surplus sectors decreased by EUR 1.0bn in the second quarter of 2018
liquidity, which totalled HRK 21.5bn in August (Figure 54). (Figure 60). This was mainly a consequence of an improve-
Interest rates on new business volume of banks dropped for ment in the central bank’s net external position (by EUR 1.0bn)
almost all types of bank loans to non-financial corporations and thanks to the purchase of foreign exchange from banks and the
households in July 2018 (Figures 28, 29 and 30). In corporate temporary depositing of funds generated through the new is-
loans, interest rates on kuna loans for working capital with a sue of government bonds. Specifically, the central government
currency clause granted for the first time saw the most substan- issued bonds worth EUR 750m on the international market in
tial decline (Figure 31), while in household loans, interest rates June in order to refinance the bonds maturing in the third quar-
on renegotiated housing loans with a currency clause decreased ter. Since the bond was partly subscribed also by domestic inves-
the most (Figure 32), along with the interest rates on consum- tors, and because the government repaid a part of its liabilities
er loans in kuna (Figure 33). Interest rates on household and arising from long-term loans, the increase in the central gov-
corporate time deposits remained virtually unchanged in July ernment’s net external debt was only EUR 0.1bn. At the same
(Figures 34 and 35). The spread between interest rates on new time, there were no substantial changes in the net external debt
loans and deposits fell to 4.97 percentage points, while the gap of commercial banks and other domestic sectors. At the end of
between interest rate spreads on loans and deposits dropped to June, total gross external debt stood at EUR 40.1bn (Figure 62),
4.62 percentage points (Figure 37). down by EUR 0.5bn from the end of the first quarter. A more
Monetary developments in July 2018 were marked by a sea- significant drop in debt was partly neutralised by unfavourable
sonal upsurge in the net foreign assets (NFA) of the monetary exchange rate changes caused by the weakening of the exchange
system, which was reflected in a jump in total liquid assets (M4) rate of the euro against the US dollar.
of HRK 5.8bn or 1.9% (Figure 49). The increase in net for- The consolidated general government deficit (ESA 2010) to-
eign assets (NFA) of the monetary system was brought about by talled HRK 1.6bn in the first quarter of 2018, almost unchanged
an increase in net foreign assets of credit institutions, while the from the same period the year before. Such developments reflect
net foreign assets of the CNB decreased in July due to the with- equal increases in total revenues and in total expenditures rela-
drawal of funds from the government’s foreign currency deposit tive to the first quarter of 2017. Revenues rose by HRK 654.6mCNB • INFORMATION ON ECONOMIC TRENDS • SEPTEMBER 2018 5
and expenditures by HRK 643.0m. Broken down by categories, central government ran a surplus of HRK 3.3bn, compared with
indirect taxes and social contributions provided a particularly HRK 2.5bn in the same period last year. The surplus increase
positive contribution on the revenue side, supported by favour- reflects a faster growth in revenues than in expenditures.
able developments in economic activities. On the other hand, As regards the trends in the general government debt, at the
the increase on the expenditure side was mainly due to growing end of May, it stood at HRK 278.9bn, down by HRK 4.4bn
other current expenditures and expenses on employees. Accord- from the end of 2017 (Table 5), largely due to the appreciation
ing to MoF data2 for the second quarter of the current year, the of the exchange rate of the kuna vis-à-vis the euro.
Figure 1 Quarterly gross domestic product Figure 3 Industrial production
seasonally adjusted real values
6 112 % 9 112
%
2015 = 100
2010 = 100
6 108
4 108
3 104
2 104
0 100
0 100
–3 96
–2 96
–6 92
–4 92 –9 88
2011 2012 2013 2014 2015 2016 2017 2018 2011 2012 2013 2014 2015 2016 2017 2018
Year-on-year rate of change of GDP
Level of GDP (seasonally adjusted values) – right Quarterly rate of change of seasonally adjusted index
Trend-cycle – right
Note: Data for the third quarter of 2018 are estimated with the use of the CNB’s
monthly indicator of real economic activity, on the basis of data published until 6
September 2018. Note: Data for the third quarter of 2018 refers to July.
Sources: CBS data seasonally adjusted by the CNB and CNB calculations. Source: CBS data seasonally adjusted by the CNB.
Figure 2 GDP rate of change Figure 4 Industrial production by main industrial groupings
contributions by components seasonally adjusted indices
8 8 % 130
2015 = 100
percentage points
6 6
120
4 4
2 2 110
0 0
100
–2 –2
–4 –4 90
–6 –6
2011 2012 2013 2014 2015 2016 2017 2018 80
2011 2012 2013 2014 2015 2016 2017 2018
Imports of goods and services Gross fixed capital formation
Exports of goods and services Government consumption Intermediate goods Non-durable consumer goods Energy
Changes in inventories Household consumption Capital goods Durable consumer goods
Gross domestic product – right
Note: The projection for 2018 refers to the official projection of the CNB from July
2018. Note: Quarterly data are calculated as the average of monthly data.
Source: CBS. Source: CBS data seasonally adjusted by the CNB.
2 Monthly data for central government, state government and social security sub-sectors which, pursuant to Council Directive 2011/85/EU, have to be published
before the end of the following calendar month. The published data refer to general government units according to the scope of the ESA 2010 statistical method-
ology, except for data for the local government, which are published on a quarterly basis.6 CNB • INFORMATION ON ECONOMIC TRENDS • SEPTEMBER 2018
Figure 5 Total volume of construction works Figure 8 Business confidence indicators
standardised and seasonally adjusted values
% 6 140 130
2015 = 100
3 120 120
0 100 110
–3 80 100
–6 60 90
–9 40 80
2011 2012 2013 2014 2015 2016 2017 2018 2011 2012 2013 2014 2015 2016 2017 2018
Construction business confidence indicator Industry business confidence indicator
Quarterly rate of change of seasonally adjusted index Retail trade business confidence indicator Long-run average = 100
Trend-cycle – right Services business confidence indicator CCI consumer confidence index
Source: CBS data seasonally adjusted by the CNB. Sources: Ipsos and CNB data seasonally adjusted by the CNB.
Figure 6 Buildings and civil engineering works Figure 9 EU confidence indices
seasonally adjusted series
160 20 120
in %, balance of responses
long-run average = 100
12 %
2015 = 100
140 8 10
105
120 4
0
100 0 90
–10
80 –4
75
–20
60 –8
40 –12 –30 60
2011 2012 2013 2014 2015 2016 2017 2018 2011 2012 2013 2014 2015 2016 2017 2018
Civil engineering works (trend-cycle) Industrial confidence index
Buildings (trend-cycle) Consumer confidence index
Buildings (quarterly rate of change) – right Economic Sentiment Index (ESI) – right
Civil engineering works (quarterly rate of change) – right
Note: Data are up to July 2018.
Source: CBS data seasonally adjusted by the CNB. Source: Eurostat.
Figure 7 Real retail trade turnover Figure 10 Goods exports (f.o.b.)
% 4 116 1.3 25
2015 = 100
billion EUR
in %, seasonally adjusted
3 112 1.2 20
1.1 15
2 108
1.0 10
1 104
0.9 5
0 100
0.8 0
–1 96 0.7 –5
–2 92 0.6 –10
0.5 –15
–3 88
0.4 –20
–4 84 2011 2012 2013 2014 2015 2016 2017 2018
2011 2012 2013 2014 2015 2016 2017 2018
Total exports (trend-cycle)
Exports excl. energy (trend-cycle)
Quarterly rate of change of seasonally adjusted index
Exports excl. energy (quarterly rate of change) – right
Trend-cycle – right
Total exports (quarterly rate of change) – right
Note: Data for the third quarter of 2018 refers to July.
Source: CBS data seasonally adjusted by the CNB. Source: CBS data seasonally adjusted by the CNB.CNB • INFORMATION ON ECONOMIC TRENDS • SEPTEMBER 2018 7
Figure 11 Goods imports (c.i.f.) Figure 14 Employment by NCA activities
seasonally adjusted data, contributions to the quarterly rate of
change
2.0 16 1.2 1570
in thousand
percentage points
billion EUR
in %, seasonally adjusted
0.8 1540
1.8 12
0.4 1510
1.6 8 0.0 1480
–0.4 1450
1.4 4
–0.8 1420
1.2 0
–1.2 1390
1.0 –4 –1.6 1360
–2.0 1330
0.8 –8
2011 2012 2013 2014 2015 2016 2017 2018 –2.4 1300
2011 2012 2013 2014 2015 2016 2017 2018
Total imports (trend-cycle)
Imports excl. energy (trend-cycle) Public sector (O, P, Q) Other Industry (B, C, D, E)
Imports excl. energy (quarterly rate of change) – right
Construction (F) Trade (G) Employment – right
Total imports (quarterly rate of change) – right
Note: Data for the third quarter of 2018 refer to July.
Source: CBS data seasonally adjusted by the CNB. Source: CPII data seasonally adjusted by the CNB.
Figure 12 Imports of capital equipment and road Figure 15 Unemployment rates
vehicles (c.i.f.) seasonally adjusted data
0.36 30 % 22
billion EUR
in %, seasonally adjusted
20
0.30 20
18
0.24 10
16
0.18 0
14
0.12 –10 12
0.06 10
–20
8
0.00 –30 2011 2012 2013 2014 2015 2016 2017 2018
2011 2012 2013 2014 2015 2016 2017 2018
Registered unemployment rate Adjusted unemployment rate
Imports of road vehicles (trend-cycle) ILO unemployment rate
Imports of capital equipment (trend-cycle)
Imports of road vehicles (quarterly rate of change) – right Notes: Since January 2015, the calculation of the registered unemployed rate has been
made using the data on employed persons from the JOPPD form. The adjusted
Imports of capital equipment (quarterly rate of change) – right
unemployment rate is the CNB estimate and is calculated as the share of the number of
registered unemployed persons in the working age population (unemployed persons
Notes: Imports of capital equipment (SITC divisions 71 – 77). and persons insured with the CPII). The most recent data available refers to July 2018.
Source: CBS data seasonally adjusted by the CNB. Sources: CBS and CNB calculations (seasonally adjusted by the CNB).
Figure 13 Trade in goods balance Figure 16 Average nominal gross wage by NCA activities
seasonally adjusted data, quarterly rate of change
0.2 % 4
billion EUR
0.0 3
–0.2 2
–0.4 1
–0.6 0
–0.8 –1
–1.0 –2
2011 2012 2013 2014 2015 2016 2017
2011 2012 2013 2014 2015 2016 2017 2018
Energy sources Capital goods Ships Industry (B, C, D, E) Public sector (O, P, Q)
Road vehicles Food Other Private sector Nominal gross wage
Raw materials excl. food and energy Total
Notes: Data on the average nominal gross wage by activity refer to data from the
RAD-1 form, and from January 2016 to data from the JOPPD form. Data for the third
Note: Series are shown as three-member moving averages of monthly data. quarter of 2018 refer to July.
Source: CBS. Sources: CBS and CNB calculations (seasonally adjusted by the CNB).8 CNB • INFORMATION ON ECONOMIC TRENDS • SEPTEMBER 2018
Figure 17 Consumer price index and core inflation Figure 20 HWWI index (excl. energy)
annualised month-on-month rate of changea
% 16 200
2015 = 100
190
12 180
170
8 160
150
4 140
130
0 120
110
–4 100
90
–8 80
2011 2012 2013 2014 2015 2016 2017 2018 2011 2012 2013 2014 2015 2016 2017 2018
Consumer price index Core inflation HWWI index (USD) HWWI index (HRK)
a
The month-on-month rate of change is calculated based on the quarterly moving
average of seasonally adjusted consumer price indices.
Sources: CBS and CNB calculations. Sources: HWWI and CNB calculations.
Table 1 Price indicators
Figure 18 Year-on-year inflation rate and contributions of year-on-year and month-on-month rates of change
components to consumer price inflation
Year-on-year Month-on-
rates month rates
3.0 6/18 7/18 7/17 7/18
percentage points
2.5 Consumer price index and its components
2.0 Total index 2.4 2.1 –0.7 –0.9
1.5 Energy 7.9 8.1 –0.6 –0.5
1.0 Unprocessed food 3.8 1.6 –0.6 –2.7
0.5 Processed food 1.5 1.7 0.5 0.6
0.0
Non-food industrial goods without
–0.5 0.5 –0.5 –2.8 –3.7
energy
–1.0 Services 1.0 1.4 0.1 0.6
–1.5 Other price indicators
–2.0 Core inflation 0.7 0.5 –0.8 –1.0
2014 2015 2016 2017 2018
Index of industrial producer prices on
Energy Unprocessed food Processed food 3.4 4.0 0.1 0.7
the domestic market
Non-food industrial goods without energy Services
Brent crude oil price (USD) 60.3 52.9 3.8 –1.0
Core inflation (%)a Consumer price index (%)
HWWI index (excl. energy, USD) 13.5 2.3 5.4 –5.0
a
Core inflation does not include agricultural product prices, energy prices and
Note: Processed food includes alcoholic beverages and tobacco.
administered prices.
Sources: CBS, Bloomberg and HWWI.
Sources: CBS and CNB calculations.
Figure 19 Crude oil prices (Brent) Figure 21 Daily nominal exchange rate – HRK vs. EUR, USD
and CHF
CNB midpoint exchange rate
130 850 9.5 8.0
USD/barrel
HRK/barrel
120
750 9.0 7.5
110
100 650 8.5 7.0
90
550 8.0 6.5
80
70 450 7.5 6.0
60
50 350 7.0 5.5
40
250 6.5 5.0
30
20 150 6.0 4.5
2011 2012 2013 2014 2015 2016 2017 2018 2011 2012 2013 2014 2015 2016 2017 2018
Brent (USD/barrel) Brent (HRK/barrel) – right EUR/HRK USD/HRK – right CHF/HRK – right
Sources: Bloomberg and CNB calculations. Source: CNB.CNB • INFORMATION ON ECONOMIC TRENDS • SEPTEMBER 2018 9
Figure 22 Nominal and real effective exchange rates Figure 25 CDS spreads for 5-year government bonds of
of the kuna selected countries
160 800
index, 2010 = 100
basis points
150
700
140
600
130
120 500
110 400
100 300
90
200
2014
2015
2016
2017
2018
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
100
Nominal Real (PPI)
0
Real (ULC total economy) Real (CPI)
2011 2012 2013 2014 2015 2016 2017 2018
Real (ULC manufacturing)
Bulgaria Czech R. Croatia Hungary
Notes: The real effective exchange rate of the kuna deflated by producer prices
Poland Romania Slovenia Slovak R.
includes the Croatian index of industrial producer prices on the total market. The unit
Germany Italy
labour cost is calculated as the ratio between compensation per employee and labour
productivity (defined as GDP per person employed), while the real effective exchange
rate of the kuna deflated by unit labour costs is the result of the interpolation of Note: Credit default swaps (CDS) spread is an annual premium that a CDS buyer pays
quarterly values. A fall in the index indicates an effective appreciation of the kuna. for protection against credit risk associated with an issuer of an instrument.
Source: CNB. Source: S&P Capital IQ.
Figure 23 Contributionsa of individual currencies to the Figure 26 CDS spreads for selected parent banks of
monthly rate of change of the average index of the nominal domestic banks
effective kuna exchange rate (INEER)
2.0 700
basis points
percentage points
1.5 600
1.0
500
0.5
400
0.0
300
–0.5
200
–1.0
–1.5 100
–2.0 0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2011 2012 2013 2014 2015 2016 2017 2018
Unicredit S.p.A. Société Générale
EUR USD CHF Other currencies INEER (%) Erste Group Bank AG Raiffeisen Bank International AG
Intesa Sanpaolo S.p.A.
a
Negative values indicate contributions to the appreciation of the INEER.
Source: CNB. Source: S&P Capital IQ.
Figure 24 Interest rates on the euro and the average yield Figure 27 Interest rates quoted on the interbank market
spread on bonds of European emerging market countries (3-month ZIBOR)
monthly averages of simple daily averages of bank quotations
% 2.5 500 % 6
basis points
2.0 400 5
1.5 300
4
1.0 200
3
0.5 100
2
0.0 0
1
–0.5 –100
2011 2012 2013 2014 2015 2016 2017 2018
0
ECB benchmark rate EONIA 6M EURIBOR 2011 2012 2013 2014 2015 2016 2017 2018
EMBI spreads for European emerging market countries – right
Sources: ECB, Bloomberg and J. P. Morgan. Source: CNB.10 CNB • INFORMATION ON ECONOMIC TRENDS • SEPTEMBER 2018
Figure 28 Short-term financing costs in kuna without a Figure 31 Interest rates on original new loans to non-
currency clause financial corporations
% 14 % 10
12
8
10
6
8
6 4
4 2
2
0
0 2015 2016 2017 2018
2011 2012 2013 2014 2015 2016 2017 2018
Working capital loans in kuna
364-day T-bills (HRK) Working capital loans in kuna indexed to f/c
Short-term kuna corporate loans without a currency clause Investment loans in kuna indexed to f/c
Short-term kuna household loans without a currency clause Revolving loans, overdrafts and credit card credit in kuna
Sources: MoF and CNB. Source: CNB.
Figure 29 Long-term financing costs in kuna with a currency Figure 32 Interest rates on original new housing loans to
clause and in foreign currency households
% 10 % 5.5
8
5.0
6
4.5
4
2 4.0
0
2011 2012 2013 2014 2015 2016 2017 2018 3.5
Long-term corporate loans with a currency clause
Long-term housing loans to households with a currency clause 3.0
Yield on generic 10-year German bond + EMBI Croatia 2015 2016 2017 2018
Long-term household loans with a currency clause, excl. housing loans
546/547-day T-bills (EUR, indexed to f/c) 455-day T-bills (EUR, indexed to f/c) Housing loans in kuna Housing loans in f/c
Total housing loans
Note: EMBI, or the Emerging Market Bond Index, shows the spread between yields
on government securities of emerging market economies, Croatia included, and
risk-free securities issued by developed countries.
Sources: MoF, Bloomberg and CNB. Source: CNB.
Figure 30 Bank interest rates on loans to non-financial Figure 33 Interest rates on original new consumer and other
corporations by volume loans to households
8 10
NIR on new loans, in %
%
9
6
8
4
7
2
6
0 5
2015 2016 2017 2018
2012 2013 2014 2015 2016 2017 2018
Consumer loans in kuna Consumer loans in f/c
Interest rate spread between loans up to HRK 7.5m and loans over HRK 7.5m Total consumer loans Other loans
Loans up to HRK 7.5m Loans over HRK 7.5m
Notes: Consumer loans include total loans to households excl. housing and other
loans. Other loans to households (denominated almost exclusively in kuna) include
credit card loans, overdrafts, revolving loans and receivables on charge cards.
Source: CNB. Source: CNB.CNB • INFORMATION ON ECONOMIC TRENDS • SEPTEMBER 2018 11
Figure 34 Interest rates on household time deposits Figure 37 Spread between interest rates on loans (excl.
revolving loans) and interest rates on deposits
% 5 % 10
4
8
3
6
2
4
1
2
0 2012 2013 2014 2015 2016 2017 2018
2012 2013 2014 2015 2016 2017 2018
Loans in kunaa – Deposits in kunaa Total – new
Short-term household time deposits in kuna Short-term household time deposits in f/c Loans in kunab – Deposits in f/c Total – balances
Long-term household time deposits in kuna Long-term household time deposits in f/c
Total household time deposits
a
Non-indexed to f/c. b Indexed to f/c.
Note: Spread between average interest rates on loans and average interest rates on
deposits should be differentiated from net interest margin (the ratio of the difference
between interest income and interest expenses to total assets of credit institutions).
Source: CNB. Source: CNB.
Figure 35 Interest rates on corporate time deposits Figure 38 Net foreign assets, net domestic assets and total
liquid assets (M4)
absolute change in the last 12 months
% 8 30
billion HRK
20
6
10
4
0
2
–10
0 –20
2012 2013 2014 2015 2016 2017 2018 2011 2012 2013 2014 2015 2016 2017 2018
Short-term corporate time deposits in kuna Short-term corporate time deposits in f/c
Long-term corporate time deposits in kuna Long-term corporate time deposits in f/c Net foreign assets Net domestic assets M4
Total corporate time deposits
Source: CNB. Source: CNB.
Figure 36 Average interest rates on loans (excl. revolving Figure 39 Net domestic assets, structure
loans) and deposits absolute change in the last 12 months
% 10 30
billion HRK
20
8
10
6
0
4
–10
2
–20
0 –30
2012 2013 2014 2015 2016 2017 2018 2011 2012 2013 2014 2015 2016 2017 2018
Loans – balances Loans – new
Net placements to the government Placements
Deposits – balances Deposits – newa
Other net assets Net domestic assets
a
For time deposits, interest rates on newly received deposits are weighted by their
balances.
Source: CNB. Source: CNB.12 CNB • INFORMATION ON ECONOMIC TRENDS • SEPTEMBER 2018
Figure 40 Placements Figure 43 Annual rate of change in household placements
transaction-based
3 15 % % 30
billion HRK
25
2 10
20
15
1 5
10
0 0 5
0
–1 –5 –5
–10
–2 –10
2011 2012 2013 2014 2015 2016 2017 2018 –15
2012 2013 2014 2015 2016 2017 2018
Transactions in total placements
Year-on-year rate of change (balance-based) – right Kuna household placement F/c household placements
Year-on-year rate of change (transaction-based) – right Total household placements
Source: CNB. Source: CNB.
Figure 41 Placements to corporates Figure 44 Annual rate of change in corporate placements
transaction-based
2 16 % % 15
billion HRK
12
10
1 8
4
5
0 0
–4 0
–1 –8
–12 –5
–2 –16
2011 2012 2013 2014 2015 2016 2017 2018 –10
2012 2013 2014 2015 2016 2017 2018
Transactions in corporate placements
Year-on-year rate of change (balance-based) – right Kuna corporate placement F/c corporate placements
Year-on-year rate of change (transaction-based) – right Total corporate placements
Source: CNB. Source: CNB.
Figure 42 Placements to households Figure 45 Structure of credit institution placements
1.2 10 % 350
billion HRK
billion HRK
300
0.6 5
250
200
0.0 0
150
100
–0.6 –5
50
–1.2 –10 0
2011 2012 2013 2014 2015 2016 2017 2018 2011 2012 2013 2014 2015 2016 2017 2018
Transactions in household placements
Placements to other sectors Placements to the central government
Year-on-year rate of change (balance-based) – right
Placements to households Placements to corporates
Year-on-year rate of change (transaction-based) – right
Source: CNB. Source: CNB.CNB • INFORMATION ON ECONOMIC TRENDS • SEPTEMBER 2018 13
Figure 46 Credit institution and MMF placements to the Figure 49 Total liquid assets (M4)
central government
100 50 % 320 16 %
billion HRK
billion HRK
90 40
300 12
80 30
280 8
70 20
60 10 260 4
50 0
240 0
40 –10
30 –20 220 –4
2011 2012 2013 2014 2015 2016 2017 2018 2011 2012 2013 2014 2015 2016 2017 2018
M4 (balance)
Placements to the central government (balance)
Year-on-year rate of change (balance-based) – right
Year-on-year rate of change – right
Year-on-year rate of change (transaction-based) – right
Source: CNB. Source: CNB.
Figure 47 Share of kuna placements in total sector Figure 50 Structure of M4 monetary aggregate
placements
% 55 320
billion HRK
50 280
240
45
200
40
160
35
120
30
80
25 40
20 0
2011 2012 2013 2014 2015 2016 2017 2018 2011 2012 2013 2014 2015 2016 2017 2018
Placements to non-financial corporations Placements to households M1 Kuna deposits Foreign currency deposits
Placements to other sectors (incl. the government sector) Bonds, money market instruments and MMFs shares/units
Source: CNB. Source: CNB.
Figure 48 Money (M1) Figure 51 Kuna savings and time deposits
120 30 % 37 45 %
billion HRK
billion HRK
110 25
100 20 34 30
90 15
80 10 31 15
70 5
60 0 28 0
50 –5
40 –10 25 –15
2011 2012 2013 2014 2015 2016 2017 2018 2011 2012 2013 2014 2015 2016 2017 2018
M1 (balance) Kuna deposits (balance)
Year-on-year rate of change – right Year-on-year rate of change – right
Source: CNB. Source: CNB.14 CNB • INFORMATION ON ECONOMIC TRENDS • SEPTEMBER 2018
Figure 52 Foreign currency deposits Figure 55 Spot transactions in the foreign exchange market
(net turnover)
180 16 % 2
billion HRK
billion EUR
170 12 1
160 8 0
–1
150 4
–2
140 0
–3
130 –4 2011 2012 2013 2014 2015 2016 2017 2018
2011 2012 2013 2014 2015 2016 2017 2018
Bank transactions with legal persons Bank transactions with natural persons
Foreign currency deposits (balance)
Bank transactions with foreign banks Bank transactions with the CNB
Year-on-year rate of change (balance-based) – right Total bank transactions CNB transactions with government and the EC
Year-on-year rate of change (transaction-based) – right
Notes: Positive values indicate net purchases and negative values indicate net sales. Legal
persons include the government. Data for the second quarter of 2018 are up to 25 May.
Source: CNB. Source: CNB.
Figure 53 Share of kuna sources Figure 56 International reserves of the CNB
at current rate of exchange
% 45 17
billion EUR
16
40
15
35
14
30 13
12
25
11
20
10
15 9
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2011 2012 2013 2014 2015 2016 2017 2018
Share of kuna sources in total sources of other monetary financial institutions
International reserves Net usable international reservesa
Share of kuna sources in total sources of other monetary financial institutions
(excl. demand deposits)
a
NUIR = international reserves – foreign liabilities – reserve requirements in f/c
– foreign currency government deposits.
Source: CNB. Source: CNB.
Figure 54 Bank liquidity and overnight interbank interest rate Table 2 Balance of payments
preliminary data, in million EUR
Indices
% 3.0 30 2017 Q1/2018a
billion HRK
2017/ Q1/2018a/
2016 2017
2.5 25
Current account 1,901.5 1,488.0 157.9 78.3
2.0 20
Capital account 308.3 284.7 46.2 92.3
1.5 15
Financial account (excl.
–786.1 895.3 – –
1.0 10 reserves)
0.5 5 International reserves 2593.1 725.1 – 28.0
0.0 0 Net errors and
2011 2012 2013 2014 2015 2016 2017 2018 –402.9 –152.3 83.5 37.8
omissions
Overnight interbank interest rate a
Sum of the last four quarters.
Liquidity surplus (incl. overnight deposits with the CNB) – right
Note: In line with the 6th edition of the Balance of Payments and International Investment
Position Manual (BPM6).
Note: Liquidity surplus is the difference between the balance in bank settlement
accounts with the CNB and the amount that banks are required to hold in their Source: CNB.
accounts after the calculation of reserve requirements.
Source: CNB.CNB • INFORMATION ON ECONOMIC TRENDS • SEPTEMBER 2018 15
Figure 57 Current and capital account flows Figure 60 Net external debt transactions
7 6 3
as % of GDP
billion EUR
billion EUR
6 5
2
5 4
4 3 1
3 2
2 1 0
1 0
–1
0 –1
–1 –2 –2
–2 –3
–3
–3 –4
2011 2012 2013 2014 2015 2016 2017
–4
Secondary income Services Primary income 2011 2012 2013 2014 2015 2016 2017 2018
Goods Capital transactions Current and capital account
Current and capital account – right
a General government Croatian National Bank Other MFIs
Current and capital account excl. one-off effectsa – right Other sectors Direct investment Total
a
Sum of the last four quarters. Notes: Transactions refer to the change in debt excl. cross-currency changes and other
Note: One-off effects include conversion of CHF-linked loans in 2015 and bank adjustments. Net external debt is calculated as the gross external debt stock net of
provisions for loans to the Agrokor Group in 2017. foreign debt claims.
Source: CNB. Source: CNB.
Figure 58 Financial account flows by type of investment Figure 61 Gross external debt transactions
4 8 3
as % of GDP
billion EUR
billion EUR
3 6
2
2 4
1 2 1
0 0 0
–1 –2
–1
–2 –4
–3 –6 –2
–4 –8
–3
–5 –10
2011 2012 2013 2014 2015 2016 2017 2018 –4
2011 2012 2013 2014 2015 2016 2017 2018
Direct investment Portfolio investment
Other investment Change in gross international reserves General government Croatian National Bank Other MFIs
Financial derivatives Total net flowsa – right Other sectors Direct investment Total
a
Sum of the last four quarters.
Note: A positive value indicates net outflow of equity abroad (including on the basis Note: Transactions refer to the change in debt excl. cross-currency changes and
of the growth in international reserves). other adjustments.
Source: CNB. Source: CNB.
Figure 59 Financial account flows by capital structure Figure 62 Gross external debt
end of period
4 12 50
as % of GDP
billion EUR
billion EUR
3 9
2 6 40
1 3
30
0 0
–1 –3
20
–2 –6
–3 –9 10
2011 2012 2013 2014 2015 2016 2017 2018
Equity liabilities, net Change in international reservesa 0
Debt liabilities, net excl. reserves Financial derivatives 2011 2012 2013 2014 2015 2016 2017 2018
Total net capital flows excl. reservesa Total net capital flowsb – right
Total net capital flows excl. reserves – right
a,b
General government Croatian National Bank Other MFIs
a
The change in gross international reserves is reported net of foreign liabilities of the Other sectors Direct investment
CNB. b Sum of the last four quarters.
Notes: A positive value indicates net outflow of equity abroad. Net flows represent the
difference between the change in assets and the change in liabilities. Note: Data are up to end-June 2018.
Source: CNB. Source: CNB.16 CNB • INFORMATION ON ECONOMIC TRENDS • SEPTEMBER 2018
Figure 63 General government debt Table 4 Consolidated central government net borrowing
GFS 2001, in million HRK
Jan. – Apr. 2017 Jan. – Apr. 2018
100 100 1 Revenue 42,702 45,379
share in general government debt, in %
as % of GDP
90 84.0 83.7 90 2 Disposal of non-financial assets 243 189
80.4 80.2 77.5
80 74.7 80
69.4 3 Expenditure 43,849 44,846
70 63.8 70
4 Acquisition of non-financial assets 1,045 908
60 60
50 50 5 Net borrowing (1 + 2 – 3 – 4) –1,949 –186
40 40 Sources: MoF and CNB calculations.
30 30
20 20
Table 5 General government debt
10 10 in million HRK
0 0
2011 2012 2013 2014 2015 2016 2017 5/2018 Jan. – May Jan. – May
2017 2018
Domestic general government debt External general government debt
SGP reference value (60%) General government debt – right Change in total debt stock 1,423 –4,377
Change in domestic debt stock 4,653 –661
Note: Nominal GDP for the last four available quarters was used for the calculation of
the relative indicator.
– Securities other than shares, short-term 901 123
Source: CNB. – Securities other than shares, long-term 4,066 –1,444
– Loans –288 686
Table 3 Consolidated general government balance Change in external debt stock –3,230 –3,716
ESA 2010, in million HRK
– Securities other than shares, short-term 147 –127
Jan. – Mar. 2017 Jan. – Mar. 2018 –S
ecurities other than shares, long-term –3,278 –734
Total revenue 37,877 38,531 – Loans –99 –2,855
Direct taxes 5,627 5,733 Memo item:
Indirect taxes 14,399 15,100 Change in total guarantees issued –226 –333
Social contributions 10,316 11,012 Source: CNB.
Other 7,536 6,686
Total expenditure 39,496 40,139
Social benefits 14,235 14,521
Subsidies 1,972 1,828
Interest 2,341 2,284
Compensation of employees 9,759 10,360
Intermediate consumption 6,288 6,221
Investment 2,714 1,740
Other 2,188 3,185
Net lending (+)/borrowing (–) –1,619 –1,608
Sources: Eurostat and CBS.CNB • INFORMATION ON ECONOMIC TRENDS • SEPTEMBER 2018 17
Abbreviations and symbols
Abbreviations n.e.c. – not elsewhere classified
OECD – Organisation for Economic Co-Operation and De-
BIS – Bank for International Settlements velopment
bn – billion OG – Official Gazette
b.p. – basis points R – Republic
BOP – balance of payments o/w – of which
c.i.f. – cost, insurance and freight PPI – producer price index
CBRD –C roatian Bank for Reconstruction and Development RTGS – Real-Time Gross Settlement
CBS – Croatian Bureau of Statistics Q – quarterly
CCI – consumer confidence index RR – reserve requirement
CDCC – Central Depository and Clearing Company Inc. SDR – special drawing rights
CDS – credit default swap SITC – Standard International Trade Classification
CEE – Central and Eastern European SGP – Stability and Growth Pact
CEFTA – Central European Free Trade Agreement VAT – value added tax
CEI – consumer expectations index WTO – World Trade Organization
CES – Croatian Employment Service ZMM – Zagreb Money Market
CHIF – Croatian Health Insurance Fund ZSE – Zagreb Stock Exchange
CLVPS – Croatian Large Value Payment System
CM – Croatian Motorways Three-letter currency codes
CNB – Croatian National Bank
CPF – Croatian Privatisation Fund ATS – Austrian schilling
CPI – consumer price index CHF – Swiss franc
CPII – Croatian Pension Insurance Institute CNY – Yuan Renminbi
CR – Croatian Roads DEM – German mark
CSI – consumer sentiment index EUR – euro
DAB –S tate Agency for Deposit Insurance and Bank Reso- FRF – French franc
lution GBP – pound sterling
dep. – deposit HRK – Croatian kuna
DVP – delivery versus payment ITL – Italian lira
EC – European Commission JPY – Japanese yen
ECB – European Central Bank USD – US dollar
EFTA – European Free Trade Association
EMU – Economic and Monetary Union Two-letter country codes
ESI – economic sentiment index
EU – European Union BG – Bulgaria
excl. – excluding CZ – Czech R.
f/c – foreign currency EE – Estonia
FDI – foreign direct investment HR – Croatia
Fed – Federal Reserve System HU – Hungary
FINA – Financial Agency LV – Latvia
FISIM – financial intermediation services indirectly measured LT – Lithuania
f.o.b. – free on board PL – Poland
GDP – gross domestic product RO – Romania
GVA – gross value added SK – Slovak R.
HANFA – Croatian Financial Services Supervisory Agency SI – Slovenia
HICP – harmonised index of consumer prices
ILO – International Labour Organization Symbols
IMF – International Monetary Fund
incl. – including – – no entry
IPO – initial public offering .... – data not available
m – million 0 – value is less than 0.5 of the unit of measure being
MIGs – main industrial groupings used
MM – monthly maturity ∅ – average
MoF – Ministry of Finance a, b, c,... – indicates a note beneath the table and figure
NCA – National Classification of Activities * – corrected data
NCB – national central bank () – incomplete or insufficiently verified data
NCS – National Clearing SystemYou can also read
