Croatia's economic growth slowed to 1.7 percent, and high prices have begun to increasingly affect citizens' spending.

After a period of higher wages and increased purchasing, households have become more cautious and less willing to spend at current prices.

Economic analyst Damir Novotny for N1 assessed that the wave of consumption, which had been helping the economy in recent years, has begun to fade. 'The wave of growth in household consumption has deflated. Households are spending less at this price level,' he said.

According to him, after the first major wage increase, citizens increased their spending, but prices continued to rise at the same time. 'We have hit the ceiling. It can no longer be expected that citizens will finance economic growth. That will not happen,' Novotny warned.

He believes that other important drivers of the Croatian economy have also reached their limits. Tourism can no longer ensure strong growth as before, while the manufacturing industry is growing too slowly and still does not have a large enough share in creating new value.

Novotny claims that the growth so far has largely relied on money from European funds, public investments, tourism, and domestic consumption encouraged by borrowing. 'The existing economic model has been exhausted,' he said, adding that economic growth cannot be sustained in the long term in such a way.

Weaker consumption could help slow inflation because traders and service providers will find it harder to raise prices if buyers begin to give up. Still, Novotny warns that Croatia is facing a period of weak economic growth alongside still high prices and believes that future progress must be based more on higher productivity and the creation of new value.

You can watch N1 portal's 'Overview of the Day' here.