CEIZ index for July 2022: Continued annual GDP growth in the third quarter of 2022

October 10, 2022

In July 2022, CEIZ index decreased by 0.63 index points compared to June 2022. At the same time, the index value decreased by 2.9 index points compared to July 2021, primarily as a result of the high CEIZ index value throughout the second quarter of 2021, during which the economic activity recovered significantly after the economy had been closed due to the implementation of epidemiological measures. When observing the individual index components, number of tourist arrivals recorded a higher seasonally adjusted value in July 2022 compared to the previous month, while volume of industrial production, state budget income from VAT revenues and real retail trade recorded a lower seasonally adjusted value.

The described index movements suggest that the economic activity, measured with annual GDP change rates, in the third quarter of 2022, compared to the third quarter of 2021, has continued to record a growth rate similar to the one registered in the second quarter of 2022. At the same time, economic activity at the very beginning of the third quarter of 2022, compared to the second quarter of 2022, is displaying a mild acceleration trend. A more precise assessment of the business cycle in the third quarter of 2022 will be possible when the index values for August and September 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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