Reuters, April 08, 2009
Croatia sales drop sharply y/y, no recovery in sight
ZAGREB, April 8 (Reuters) - Croatia's retail sales dropped almost 20 percent in February, led by a huge decline in car sales, in another sign of the heavy toll the global crisis was taking on the small European Union candidate's economy.
After the usual spending boom at Christmas, sales dropped 13.7 percent in January and 19.1 percent in February, the state statistics office said on Wednesday.
'I have expected a double-digit fall this month, but not as much. The effects of the working ban on Sundays are evident. Also, we see a strong increase in crediting the state and a slowdown in loans to the corporate sector and citizens,' Zdeslav Santic, an analyst at Raiffeisenbank said.
The government imposed the ban last year, allowing shops to work on Sundays only in the summer and before Christmas.
'It is also likely that we will see lower spending and shorter stays of tourists this season which will negatively affect retail sales and the overall growth,' Santic said.
The government expects the economy to contract two percent this year, while analysts, including the International Monetary Fund, warn that there are serious risks of a fall of up to four percent or even beyond.
A survey by local pollster Promocija Plus, published this week, said car sales had declined as much as 41.5 percent in the first three months over the same period last year.
'We started to feel a sharp fall on the market already in November,' said Hrvoje Dokoza, a marketing director in the local sales representative of Korean car maker Hyundai.
'I don't expect a further steep fall in sales in the coming months, but I don't see a recovery taking place this year either. We hope Croatia will not suffer a weak tourist season, which would further depress the market in the autumn,' he said.
Retail sales, along with state investments and tourism, have been a major driver of economic growth in recent years.
The sale of shoes and clothes dropped 25 percent in February.
'We really saw a decline in the last two months, the only items that went well were those on sale. I hope spring models will fare better,' said Ljiljana, a saleswoman, as she stood at her impeccably clean but empty textile store in Kaptol Centar, a shopping mall in downtown Zagreb.
Drasko Karadza, a supplier of Italian-made coffee, also said the sales were hurt.
'Orders have declined and customers are switching to poorer-quality cheaper coffee. The drop is evident but not so drastic to make me lay off workers just yet,' he said.
'What is also worrying is that customers who do not pay regularly are now using the global crisis as a pretext to delay payments even more,' he said.