CNB Council: GDP continues to grow; the war in Ukraine and sanctions against Russia to have a negative impact on the economy

Published: 11/3/2022

At its 446th meeting the CNB Council discussed current economic and financial developments, adopted a report on international reserve management in 2021 and issued several decisions on matters within its competence.

In the last three months of 2021 real economic activity remained on the level from the previous quarter. The annual growth rate decreased due to the gradual disappearance of the effect of the pandemic-induced low economic activity level in 2020. However, it still remained very high (9.7%). Although available monthly indicators suggest that real GDP grew at the quarterly and annual level in the first quarter of 2022, the war in Ukraine and sanctions imposed on Russia are to have a negative impact on future developments. Employment continued to grow and unemployment to decrease at the beginning of 2022. Nominal wages also continued to grow, but their purchasing power was diminished due to consumer price growth. The annual consumer price inflation rate accelerated from 5.5% in December to 5.7% in January due primarily to a price increase in processed food products. Banks’ free reserves reached their all-time high, while corporate and household financing costs grew. Banks’ placements remained almost unchanged from the previous month, with their annual growth rate decelerating from 3.9% in December of the previous year to 3.6% in January this year. Such developments were mainly caused by a slowdown in the growth of corporate lending (down from 2.3% in December to 1.6% in January) and to a smaller extent of household lending (down from 4.5% to 4.4% in the same period). The growth of housing loans continued to decelerate before the new round of subsidies, whereas the growth of general-purpose cash loans accelerated.

The CNB Council granted approval to the Supervisory Board of Banka Kovanica d.d. for the appointment of Nicola Ceccaroli as Chairman and Ivan Mužić as Member of the bank's Management Board.