In line with our expectations, the high-frequency data point to a mixed trend in economic activity in Q1 2024. A strong labour market, the continued increase in consumer optimism coupled with weakening inflationary pressures and the acceleration in consumer loan growth had a positive impact on retail sales. On the other hand, industrial production is still not showing any signs of recovery at the beginning of 2024. |
In this quarterly asset allocation update, we provide the typical Croatian EUR investor with an in-depth market analysis, explanations of the individual asset classes, and the optimal portfolios under various risk tolerance levels. |
Economic activity in Croatia continues to grow at solid rates that are among the highest in the EU. Private consumption will remain the growth driver in 2024, while rising government spending, due to the political cycle, increases the risk of fiscal deterioration in the medium term. Inflation has declined, although it is still at a high level and, a gradual monetary easing has become increasingly likely. Under these conditions, the equity market should perform well, albeit with limited upside potential after the stellar performance of CROBEX index during 2023 and at the beginning of 2024. |
Driven by personal consumption, but also fuelled by investment activity, Croatia recorded a strong real annual growth rate of 4.3% in Q4 2023. We expect private consumption to remain the main engine of positive developments in 2024. |
Along with the monthly decline in consumer prices, the slowdown in the annual growth rate continued for the fourth consecutive month in December. According to preliminary data, the average annual inflation rate in 2023 was 8%, in line with our expectations. |