Summary

• The current and capital account balance stood at EUR –2.54bn in the first quarter of 2024, up from EUR –2.18bn in the same quarter of the year before.
• The financial account of the balance of payments recorded a negative balance of EUR 2.70bn (net capital inflow) in the first quarter of 2024, up from EUR –0.76bn in the same quarter of the year before.
• The net international investment position at the end of the first quarter of 2024 stood at EUR –18.43bn or –23.8% of GDP.
• Gross external debt stood at EUR 64.9bn or 83.7% of GDP at the end of the first quarter of 2024.

The current and capital account of the balance of payments (Figure 1) ran a deficit of EUR 2.54bn in the first quarter of 2024, faring worse by EUR 0.36bn than in the same period of the previous year. This was mostly due to a fall of EUR 0.28bn in the positive balance in the services sub-account from the same quarter of the year before, primarily as a result of smaller revenues from manufacturing services on physical inputs, which were unusually high in the same quarter of the year before. The balances in goods, primary and secondary income^[1] improved somewhat from the first quarter of the year before. The balance in capital transactions worsened by EUR 0.26bn from the same quarter of the year before, although it remained positive (EUR 0.20bn).

Figure 1 Balance of payments ̶ current and capital account
¹Sum of the last four quarters.

Source: CNB.

The net capital inflow (negative difference between total assets acquired and total liabilities assumed) in the financial account (Figure 2) stood at EUR 2.70bn in the first quarter of 2024, up by EUR 1.94bn from the same period of the year before. The net capital inflow recorded was mostly due to a large net inflow in the other investment account (EUR 2.37bn). International reserves, which after entry of the Republic of Croatia into the euro area mainly refer to the dollar portfolio managed by the Croatian National Bank, fell slightly during the observed period. The net inflow in the direct investment sub-account stood at approximately EUR 0.70bn, and the portfolio investment sub-account recorded a net capital outflow of EUR 1.02bn.

Figure 2 Balance of payments ̶ financial account
¹Sum of the last four quarters.

Source: CNB.

If the last four quarters are observed (Table 1), the cumulative balance in the current and capital account stood at EUR 2.64bn or 3.4% of GDP while that for the whole of 2023 stood at EUR 3.0bn or 3.9% of GDP. In the last four quarters, the financial account recorded a net inflow of EUR 0.73bn or 0.9% of GDP, in contrast with a net outflow of EUR 1.21bn or 1.6% of GDP recorded in 2023.

Table 1 Balance of payments
* Sum of the last four quarters.

Note: Positive net values for individual financial account components in Table 1 and Figure 2 indicate that transactions by which foreign assets are acquired are larger than the transactions by which foreign liabilities are assumed for a given financial account component over a given period or denote net capital outflow abroad. Negative values indicate that the transactions by which foreign assets are acquired are smaller than the transactions by which foreign liabilities are assumed for a given financial account component over a given period or denote net capital inflow from abroad.
Source: CNB.

The net international investment position (Figure 3) stood at EUR –18.43bn at the end of the first quarter of 2024, with its negative balance increasing by EUR 1.72bn from the end of 2023. The relative indicator of the net international investment position fell from –22.0% of GDP at the end of 2023 to –23.8% of GDP.

Figure 3 International investment position

Note: The net international investment position equals the difference between domestic sectors' foreign assets and liabilities at the end of a period. The negative value of the net international investment position indicates that foreign liabilities of Croatian residents are greater than their foreign assets. Included are assets and liabilities based on debt instruments, equity investments, financial derivatives, and other instruments.
Source: CNB.

Considering the share of the international investment position in GDP by type of investment (Figure 4), the share of net debt investment in GDP worsened from 3.2% at the end of 2023 to 1.5% at the end of the first quarter of 2024, while the share of net equity investment improved slightly from –25.7% to –25.4%.

Figure 4 Share of international investment position in GDP by type of investment

At the end of the first quarter of 2024, gross external debt (Figure 5) stood at EUR 64.9bn or 83.7% of GDP, up by EUR 0.9bn from the end of 2023 and down by 0.7 percentage points of GDP from the end of 2023. Gross external debt, which excludes the CNB (70.9% of the total gross external debt) rose by EUR 1.82bn from the end of 2023 or by 1.1 percentage points if the share of debt in GDP is observed.

Figure 5 Stock of gross external debt^[2]

Detailed balance of payments data
Detailed gross external debt data
Detailed data on the international investment position

1. Primary income consists of employee compensations and investment income (retained earnings, dividends, interest). Secondary income refers to current transfers (workers’ remittances, pensions, gifts and grants, taxes and contributions, flows of funds as part of international cooperation). ↑

2. After the Republic of Croatia joined the euro area, gross external debt increased by the amount of liabilities associated with the allocation of the euro banknotes within the Eurosystem. This amount is the difference between the amount of banknotes in circulation, the allocation to which the CNB is entitled according to the ECB’s key, and actually issued banknotes in circulation. In addition, this amount of liabilities is reduced by the estimated amount of euro banknotes in circulation in the Republic of Croatia that are issued under the ECB’s key of other euro area countries. Only the amount of the difference between the amount of banknotes in circulation, the allocation to which the CNB is entitled according to the ECB’s key, and the actually issued banknotes in circulation is recorded on the foreign claims side, so that the effect on the balance of net external debt is favourable since the balance of assets is larger than the balance of liabilities. ↑