A mild growth in the second quarter and the stagnation at the beginning of the third indicate that the annual economic downturn and decline in the number of employed persons could be milder than predicted in July, the Council said in a statement.
The HNB Council in July adopted a new monetary projection, predicting that GDP could decline about one per cent this year.
The improvement on the current account balance in foreign trade continued in Q2, with the surplus reaching 0.8 per cent of GDP, mainly due to lower profits of foreign companies and banks.
Unfavourable movements in the exchange of commodities had the opposite effect on the balance because the increased import of some products before Croatia joined the European Union on July 1 was stronger than the temporary growth of food exports to Central European Free Trade Agreement countries.
Inflationary pressure in the domestic economy remained muted. In Q3, the annual inflation rate stabilised on a relatively low level, amounting to 1.9 per cent in August, after a higher level in the first half of the year. However, the monthly change rates of the main price indices grew in Q3 as a result of administrative decisions and the higher price of oil on the world market.
The central bank said the expansive monetary policy continued to support a high liquidity of domestic banks, with the average overnight interbank interest rate remaining remarkably favourable at 0.6 per cent and with the kuna-euro exchange rate within the usual limits.