CEIZ index for June 2021: Strong growth of quarterly GDP in the second quarter of 2021

In June 2021, the CEIZ index rose by 6.33 index points compared to June 2020. At the same time, the average index value for April, May, and June 2021 (i.e., for all three months of the second quarter) was as much as 12.3 index points higher compared to the same period last year, when the economy was, for its most part, closed due to the implementation of public health measures. When observing index components in April, May, and June 2021, compared to the same period in 2020, all four index components (state budget income from VAT revenues, volume of industrial production, real retail trade, and the number of tourist arrivals) registered growth, with annual growth rates reaching between 13.9 percent (growth rate of industrial production) and 131 percent (growth rate of the number of tourist arrivals).

The described index movements suggest that the economic activity measured with quarterly GDP change rates in the second quarter of 2021 is strongly accelerating compared to the same period last year. Based on the index movements, it can be estimated that the Croatian economy will grow by 15.0 percent in the second quarter of 2021 compared to the same quarter in 2020. The index movements suggest that the quarterly GDP change rate in the second quarter will also be positive and should amount to 1.4 percent.


* 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.