CEIZ index for February 2023: Slowing down of annual GDP growth in the first quarter of 2023

May 10, 2023

In February 2023, CEIZ index recorded a drop of 1.29 index points compared to the same month in 2022, while compared to the previous month, it recorded a very mild decrease of 0.11 index points. When observing individual index components, compared to January 2023, two index components recorded a higher seasonally adjusted value in February 2023: the number of tourist arrivals and real retail trade. State budget income from VAT revenues recorded a decrease of seasonally adjusted value compared to the previous month, while the volume of industrial production index component stagnated.

Based on the index movements, it can be estimated that, in the first quarter of 2023, the Croatian economy will rise by 3.8 percent compared to the same period last year, which means that the annual GDP growth rate in the first quarter continues to slow down, which has been recorded since the second quarter of 2022. A more precise assessment of the business cycle in the first quarter of 2023 will be possible when the index values for March 2023 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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