CEIZ index for November 2022: Stagnation of quarterly GDP in the fourth quarter of 2022

January 17, 2023

In November 2022, CEIZ index recorded a decrease of 1.34 index points compared to November 2021. At the same time, compared to October 2022, the index value rose by 0.18 points. When observing the individual index components, three index components recorded a higher value in November 2022 compared to November 2021: state budget income from VAT revenues, real retail trade, and number of tourist arrivals, while volume of industrial production recorded a decrease. At the same time, compared to October 2022, number of tourist arrivals recorded a lower seasonally adjusted value in November 2022, while the other components recorded a higher seasonally adjusted value.

The described index movements suggest that the economic activity, measured with annual GDP change rates, in the fourth quarter of 2022, compared to the fourth quarter of 2021, amounted to 4.7 percent, continuing to record a single-digit annual GDP growth rate as in the second and third quarter of 2022. Overall GDP growth rate in 2022 could, according to these estimates, amount to 6.5 percent. However, since the economic activity in the first two months of the fourth quarter, compared to the third quarter of 2022, has indicated a deceleration trend, GDP in the fourth quarter could record a stagnation compared to the third quarter. A more precise assessment of the business cycle in the fourth quarter and entire year of 2022 will be possible when the index values for December 2022 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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