CEIZ index for May 2023: Annual GDP growth continues in the second quarter

July 11, 2023

In May 2023, CEIZ index dropped by 1.33 index points compared to May 2022. At the same time, compared to the previous month, the index value rose by 0.24 index points. When observing individual index components, all four index components (volume of industrial production, real retail trade, number of tourist arrivals, and state budget income from VAT revenues) recorded a higher seasonally adjusted value in May 2023 compared to April 2023. All four index components also registered a growth compared to May 2022.

The described index movements suggest that the economic activity of the Croatian economy, in the second quarter of 2023, is accelerating compared to the previous quarter, mostly due to positive movements that the index recorded in May 2023. Based on the index movements, it can be estimated that, in the second quarter of 2023, the Croatian economy will rise by 2.9 percent compared to the same quarter last year. It is important to note that we will be able to reach conclusions on the state of the business cycle in the second quarter of this year with more certainty only when CEIZ index values for June are published. 

* 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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