CEIZ index for November 2021: Continued annual GDP growth in the fourth quarter of 2021

January 21, 2022

In November 2021, CEIZ index increased by 3.75 index points compared to November 2020. At the same time, the index value dropped by 0.66 points compared to October 2021, which presents the second consecutive decrease of monthly index value. When observing individual index components, all four index components (state budget income from VAT revenues, volume of industrial production, real retail trade, and the number of tourist arrivals) recorded a higher value in November 2021 compared to November 2020. At the same time, compared to October 2021, seasonally adjusted value of index components in November 2021 dropped in retail trade and the number of tourist arrivals, suggesting a mild deceleration of economic activity in November, compared to the previous month.

The described index movement suggests that economic activity, measured with annual GDP change rates, in the fourth quarter of 2021, compared to the same quarter in 2020, amounted to 12.8 percent, continuing to record a double-digit annual GDP growth rate as in the second and third quarter of 2021. Overall GDP growth rate in 2021 could, according to these estimates, amount to 11 percent. However, since the economic activity in the first two months of the fourth quarter, compared to the third quarter of 2021, showed a mild deceleration trend, the annual growth rate in the fourth quarter, as well as the overall GDP growth rate in 2021, could also be lower than estimated.  A more precise assessment of the business cycle in the fourth quarter of 2021 and in the entire 2021 will be possible when the index values for December 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.

Attached documents