CNB Council: A pick-up in economic activity in the second quarter

Published: 9/9/2015

At its session today, the Council of the Croatian National Bank reviewed current economic and monetary indicators and a report on international reserve management in the first half of 2015. The Council also adopted a few decisions within its competence.

Economic activity intensified in the second quarter of 2015, with real GDP up at an annual rate of 1.2%, compared with 0.5% in the first quarter of the year. The increase was mostly due to the growth of net exports of goods and services and to some extent to domestic demand. The pick-up in economic activity had a positive effect on labour market trends, leading to an increase in employment and continued decrease in unemployment.

Due to a decline in global crude oil prices that pushed down refined petroleum product prices, consumer prices declined at an annual rate of -0.4% and at a monthly rate of -0.8% in July, the latter mainly caused by a seasonal drop in clothing, footwear and vegetable prices.

The kuna/euro exchange rate remained stable in July and August. Despite a continuation of expansionary monetary policy and gradual decrease in interest rates, bank lending to domestic sectors remained subdued, as evident from a further decrease in corporate and household lending.

As regards public finances, available data show that fiscal consolidation continued in the second quarter of this year as a result of a faster growth of revenues than expenditures.

International reserves totalled EUR 13.7bn at the end of June 2015, an increase of EUR 1.04bn (about 8.2%) from the end of 2014. Net international reserves (exclusive of foreign exchange reserve requirements, IMF's Special Drawing Rights, European Commission’s funds, MoF's foreign exchange funds and repo transactions) grew by EUR 650.1m (6.1%) in the first half of this year, reaching EUR 11.3bn. The discussion on the international reserve management report highlighted the CNB's commitment to manage international reserves with safety of investments as the primary consideration and its effort to generate good financial results despite an environment of very low and even negative deposit interest rates and low and partly negative yields on other safe types of investments.

KentBank d.d., Zagreb was given authorisation to provide additional financial services – activities related to the sale of insurance policies – and Podravska banka d.d., Koprivnica was granted approval for the acquisition of POBA faktor d.o.o., Zagreb. The CNB Council also approved the decision of the Supervisory Board of Wüstenrot stambena štedionica d.d., Zagreb to appoint Zdravko Anđel to another term as Chairman of the Management Board.