CEIZ index for January 2022: Continued annual GDP growth in the first quarter of 2022

March 21, 2022

In January 2022, CEIZ index rose by 1.74 index points compared to January 2021. At the same time, the index dropped by 1.28 points compared to December 2021. When observing the individual index components, all four index components (state budget income from VAT revenues, volume of industrial production, real retail trade, and the number of tourist arrivals) registered a growth in January 2022 compared to January 2021. Additionally, seasonally adjusted values of index components dropped in January 2022 compared to December 2021 for all index components except for state budget income from VAT revenues, suggesting mild deceleration of economic activity in January 2022 compared to the previous month.

The described index movements suggest that the economic activity, measured with annual GDP change rates in the first quarter of 2022, compared to the first quarter of 2021, has continued to record a single-digit growth rate as in the fourth quarter of 2021.  At the same time, economic activity at the very beginning of the first quarter of 2022, compared to the fourth quarter of 2021, is indicating a mild deceleration trend. A more precise assessment of the business cycle in the first quarter of 2022 will be possible when the index values for February and March 2022 become available.

* Monthly assessment of GDP growth rate based on CEIZ index value is indicative and should be used primarily as information on the current condition and trend of the business cycle in Croatia.

What is CEIZ?

Coincident Economic Index of the Institute of Economics, Zagreb (CEIZ) is a monthly composite business cycle indicator developed by the Institute of Economics, Zagreb. Its purpose is to provide timely information on the current business cycle condition. Consequently, the CEIZ index value changes simultaneously with the business cycle, thus indicating the present state of the economy. The CEIZ index was constructed by applying in parallel a dynamic factor model and a Markov switching model. Details on the CEIZ index methodology are described in the paper: Rašić Bakarić, Ivana, Marina Tkalec and Maruška Vizek, 2016, “Constructing a Composite Coincident Indicator for a Post-Transition Country”, Ekonomska istraživanja (Economic Research), 29 (1), pp. 434–445. 

The CEIZ index is useful in three ways. First, it is a single-number business cycle indicator containing information that would otherwise have to be accrued by analyzing a large number of economic series. Second, unlike the GDP series, it provides monthly estimates on the state of the economy, thus providing information on fine changes that took place in a short period of time. Third, the CEIZ index is available one to three months prior to quarterly GDP estimates, meaning that policy-makers and the general public can observe the current state of the economy in a timely manner. 

The index is to be interpreted in such a way that the positive values represent economic growth while the negative ones represent a decreased economic activity.

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