BMI View: Over our five-year outlook, Croatia's consumer market will experience positive growth. This ison the back of the country's positive economic outlook as well as improving labour market dynamics.
Consumer indicators in H117 have shown considerable recovery in market sentiment by historicalstandards, with consumer confidence and retail sales on an upward trend.
Economic growth outperformed our expectations in 2016, coming in at 3.0% up from our 2.7% estimates.
In 2017, we forecast real GDP growth of 2.9%. Over our five-year outlook, private consumption willremain the main component of economic growth accounting for around 57% of GDP. Consumer activitywill continue to tick upwards in our view, due to a cut in personal income tax that went into effect onJanuary 1 2017. Real private consumption growth will reach 3.5% in 2017, up from 3.3% in 2016. Thatsaid, over the long term, significant structural issues facing Croatia (emigration, high unemployment andan ageing population) will continue to limit consumer prospects.