CEIZ for February 2022: GDP annual growth slows down in the first quarter of 2022

April 25, 2022

In February 2022, CEIZ index value increased by 1.62 index points compared to the same month in 2021, while compared to the previous month, it recorded a mild drop of 0.13 index points. When observing the individual index components, three index components (volume of industrial production, the number of tourist arrivals and real retail trade) registered a higher seasonally adjusted value in February 2022 compared to January 2022. The component state budget income from VAT revenues recorded a lower seasonally adjusted value compared to the previous month.

Based on the index movements, it can be estimated that the Croatian economy will grow by 7.3 percent in the first quarter of 2022 compared to the same period last year, which means that annual GDP growth rate in the first quarter continues to slow down, as has been recorded since the third quarter of 2021. A more precise assessment of the business cycle in the first quarter of 2022 will be possible when the index values for 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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