CEIZ index for July 2021: Continued strong annual GDP growth in the third quarter of 2021

September 20, 2021

In July 2021, the CEIZ index rose by 5.3 index points compared to July 2020. At the same time, the index value was 0.53 points lower compared to June 2021. When observing the individual index components in July 2021, compared to the same month 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. At the same time, the seasonally adjusted values of the index components were lower in July 2021 compared to June 2021 for all index components except the number of tourist arrivals.

The described index movements suggest that the economic activity, measured with annual GDP change rates, in the third quarter of 2021, compared to the same quarter last year, has continued to record a double-digit growth rate as in the second quarter of 2021. At the same time, the economic activity at the very beginning of the third quarter is indicating a mild decelerating trend compared to the second quarter of 2021. A more precise assessment of the business cycle in the third quarter of 2021 will be possible when the index values for August and September 2021 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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