engleski

Dynamic Analysis of Macroeconomic Trends in Croatia

This paper introduces a series of economic tracer tools, used to identify and explain the dynamics of macroeconomic trends in Croatia. Although common abroad, this group of economic tracers have not yet been done for Croatia. The macroeconomic analyses of trends in the Croatian economy have usually been based on time series indicators of economic activity, such as GDP growth rates, unemployment rates, the CEIZ business cycle index, consumer confidence surveys, etc. These indicators are characterized by high volatility in the short term, and the growth of some of the indicators does not necessarily imply a turning point in the business cycle. It may be only a short-term change that disappears after a month or two. Furthermore, from these indicators, it is not immediately clear to the average observer in which of the four standard phases of the business cycle the analysed sector or indicator is located, where the turning points were, what the current position with respect to the long-term average trends of the Croatian economy is, and whether the dynamics of changes accelerates or decelerates. In this paper, we introduce a series of economic tracers that present cyclical movements of various variables in the Croatian economy through time in a simple and visually attractive way. By cyclically moving along the quadrants of the coordinate system in a counterclockwise direction, economic tracers tell us whether certain indicators of the Croatian economy are above or below their long-term average, whether they are moving in a positive or negative direction, where they are located, and how far they are from the turning point of economic activity. There are two aspects of the economy whose movements through the four phases of the economic cycle (expansion, downswing, recession, and upswing) are presented in this paper. The first one is the business cycle tracer that shows the movement of industrial production, retail trade, construction, inflation, real wages, consumer sentiment, employment, exports and imports of goods over time. The second one is the economic climate tracer based on the economic sentiment indicator for the Croatian economy, as well as its individual sectors (industry, services, consumer, retail trade, and construction). Currently, both of our economic tracers and the majority of their components are deep in the expansion phase of the economic cycle. Most of the components entered the expansion phase in the beginning of 2021 driven by the strong rebound of the economic activity in Croatia in the aftermath of the recession in 2020 caused by the Covid-19 pandemic and the containment measures. More importantly, the position, as well as the movement of the business cycle and economic climate tracers in the last couple of months, point to a continuation of strong economic growth in the second half of the year.

macroeconomic trends ; business cycles ; economic climate ; economic tracer

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