CEIZ index for June 2022: Annual GDP grows by 5.7 percent in the second quarter

August 18, 2022

In June 2022, CEIZ index dropped by 0.20 index points compared to the average index value in the first quarter of 2022. At the same time, the index dropped by 0.69 points compared to the previous month. When observing individual index components, three index components (real retail trade, the number of tourist arrivals, and state budget income from VAT revenues) recorded a somewhat lower seasonally adjusted value in June, compared to May 2022. Volume of industrial production index was the only index component to record a higher seasonally adjusted value in June. However, all four index components recorded a higher value in June 2022 compared to June 2021.

The described index movements suggest that the economic activity measured with quarterly GDP change rates, in the second quarter of 2022, is increasing compared to the same period last year. However, when observing individual months in the second quarter, it can be noticed that the economic activity is significantly slowing down on a monthly level. If this trend continues in the third quarter, GDP growth in that quarter could either significantly slow down or completely stop. Based on the current CEIZ index movements, it can be estimated that, in the second quarter of 2022, the Croatian economy will grow by 5.7 percent compared to the same quarter in 2021.

* 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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