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Economic Overview

Croatia’s economic growth has consistently exceeded the EU average over the past four years. According to the Croatian Central Bank, GDP grew by 3.8% in 2024, driven primarily by private consumption, supported by strong real wage and employment growth, along with sustained investment. Government consumption also increased, on the back of a broad public sector wage reform that standardised salaries across institutions and sectors, leading to a significant one-off wage hike. Moreover, the tourism sector, one of the key drivers of economic growth, recorded a positive performance. GDP growth is projected to slow to 3.3% in 2025 and 2.9% in 2026 as consumption growth eases due to slower wage increases. Investment growth will continue, supported by increased absorption of EU funds under the RRF and 2021-27 MFF, albeit at a reduced pace (data EU Commission).

Fitch Ratings estimated Croatia's fiscal deficit at 2.1% of GDP in 2024, up from 0.9% in 2023, primarily due to higher costs from the abovementioned wage bill reform implemented in April 2024. This reform raised total wage costs to 12.8% of GDP, a 1.5 percentage point increase from 2023. Defence spending was estimated at 2% of GDP in 2024, with plans to raise it to 2.5% by 2027 in response to geopolitical risks. Fitch expected the deficit to remain at 2.1% in 2025, below the government's 2.3% target, reflecting past outperformance of deficit targets. A new property and short-term rental tax, effective January 2025, was expected to generate an additional 0.3% of GDP in revenue, with further increases in the following years. However, elevated external uncertainty and potential pre-election spending in May 2025 posed risks to this projection. The deficit is forecast to narrow to 1.7% in 2026. Public debt as a percentage of GDP fell to 57.4% in 2024, with debt reduction expected to continue beyond 2024, although at a slower pace, due to the normalisation of nominal GDP growth, a balanced primary budget position, and Fitch's expectations of higher defence spending. Fitch forecasts public debt/GDP to decline to 53.5% by 2029. General government interest payments are projected to average 3.6% of revenue in 2025-2026. The country’s average annual inflation slowed to 3.0% in 2024, down from 8.0% in 2023 and 10.8% in 2022. Forecasts agree on a further decrease in 2025, at around 2.8%.

According to IMF estimates, unemployment decreased to 5.6% in 2024, from 6.2% one year earlier, and is expected to remain stable at 5.5% over the forecast horizon. Labour shortages persisted despite the rising influx of workers from non-EU countries. Though the average revenue of Croatians is still below the European one (with an estimated GDP per capita PPP of USD 48,811 in 2024 according to the IMF), Croatia remains the second most developed economy of the Balkan region, after Slovenia.

 
Main Indicators 2023 (E)2024 (E)2025 (E)2026 (E)2027 (E)
GDP (billions USD) 82.7189.6796.03101.55106.37
GDP (Constant Prices, Annual % Change) 3.13.42.92.72.6
GDP per Capita (USD) 21,52123,38025,08126,56827,874
General Government Balance (in % of GDP) -1.8-3.5-2.5-1.9-1.5
General Government Gross Debt (in % of GDP) 63.059.958.757.857.0
Inflation Rate (%) 8.44.02.82.22.2
Unemployment Rate (% of the Labour Force) 6.25.65.55.55.5
Current Account (billions USD) 0.891.320.880.540.43
Current Account (in % of GDP) 1.11.50.90.50.4

Source: IMF – World Economic Outlook Database , October 2021

Country Risk

See the country risk analysis provided by La Coface.

 

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Main Sectors of Industry

The agricultural sector represents only 3.4% of the country's GDP and employs 4.7% of the workforce (World Bank, latest data available). Croatia has 1.5 million hectares of agricultural land and more than 1.9 million hectares of forests (FAO). The country is self-sufficient in the production of wheat, corn, sugar beet, fruits, wine, and olive oil; however, imports of agricultural products have been on the rise in recent years. The size of the farms is generally small (in most cases less than 3 hectares). According to preliminary figures from the State Bureau of Statistics (DZS), the value of real income in agriculture for 2024 was projected at EUR 1.62 billion, marking a decrease of 6.3% in relation to the previous year. Concerning the value of agricultural production, the latest projection pointed to a decrease of 0.3%, to EUR 2.83 billion.

The secondary sector contributes 21% of GDP and employs 27.5% of the active population. Croatian industry is concentrated in competitive activities: textiles, wood, steel industry, aluminium, and the food industry. With more than one-third of the territory covered with forests, the wood industry is one of the fundamental sectors of the economy. The country has limited mineral resources. The manufacturing sector is estimated to contribute 12% of the national value added. Data from the State Bureau of Statistics (DZS) indicate that Croatia's industrial output declined by 2.4% year-on-year in 2024. Mining saw a 0.7% decrease, manufacturing contracted by 1.5%, and utilities dropped by 8.2%.

The service sector represents 59.1% of the country’s GDP, employing 67.1% of the workforce. The tourism sector, in particular, is among the key segments of the Croatian economy, accounting for almost a quarter of GDP, one of the largest shares in the EU. According to the Ministry of Tourism and Sports, Croatia recorded a 4% increase in tourist arrivals in 2024, exceeding 21.3 million, and a 1% rise in overnight stays, surpassing 108.7 million. The retail sector is also important: in 2024, retail sales volume rose by a real 7.3% (data DZS). Croatia's banking sector, one of the economy's strongest, benefits from efficient regulation and disciplined borrowers. It comprises 20 banks and 3 home saving banks, with 90.2% foreign ownership, including 11 EU-owned banks. Nearly 150 EU institutions also offer services in Croatia.

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 4.7 27.5 67.9
Value Added (in % of GDP) 3.4 21.0 59.1
Value Added (Annual % Change) 2.0 0.6 4.5

Source: World Bank - Latest available data.

 
Monetary Indicators 20162017201820192020
Croatian Kuna (HRK) - Average Annual Exchange Rate For 1 USD 6.816.626.286.606.61

Source: World Bank - Latest available data.

 

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Foreign Trade

Croatia joined the WTO in 2000 and depends heavily on foreign trade, which amounts to 108% of the GDP (World Bank, latest data available). The country mainly exports machinery and transport equipment (8.7% of total exports in 2023), fabricated metal products (6.2%), chemicals and chemical products (5.5%), and basic pharmaceutical products and pharmaceutical preparations (5%); whereas imports are led by machinery and transport equipment (26.8%), food products (9.7%), motor vehicles, trailers and semi-trailers (7.8%), chemicals and chemical products (7.2%), and basic pharmaceutical products and pharmaceutical preparations (4.6% - data DZS).

In 2023, the main export partners were Italy (12.2%), Germany (12.2%), Slovenia (11.2%), Bosnia and Herzegovina (10.1%), and Hungary (6.9%). In the same period, the leading import origins were Italy (14.5%), Germany (14.2%), Slovenia (11.5%), Hungary (6.4%), and Austria (5.5% - data Comtrade). Overall, the EU accounted for 68% of total exports and 77% of imports (-6% and +3% y-o-y, respectively – DZS).

In terms of merchandise, Croatia has a structural trade deficit: according to figures by the WTO, in 2023, exports of goods totalled USD 24.9 billion (-2.2% y-o-y) while imports decreased by 3.2%, to USD 43.1 billion. However, the country is a net exporter of services thanks to its buoyant tourism industry, with exports – at USD 24.3 billion – far above imports (USD 7.2 billion). According to figures from the World Bank, the overall trade deficit stood at an estimated 1.8% of GDP in 2023, down from 6.2% one year earlier.  Preliminary figures from the Croatian Bureau of Statistics show that, in 2024, the country’s trade deficit widened to EUR 17.8 billion (USD 18.5 billion). Exports grew by 4.6% year-on-year to EUR 23.9 billion (USD 25.4 billion), while imports rose by 5.4% to EUR 41.8 billion (USD 44.4 billion).

 
Foreign Trade Values 20192020202120222023
Imports of Goods (million USD) 28,16026,83034,52744,62343,181
Exports of Goods (million USD) 17,18017,19321,87825,46724,894
Imports of Services (million USD) 5,6914,1405,3016,0507,265
Exports of Services (million USD) 17,17710,28516,88520,34124,292

Source: World Trade Organisation (WTO) ; Latest available data

Foreign Trade Indicators 20192020202120222023
Foreign Trade (in % of GDP) 101.489.5102.3125.2107.7
Trade Balance (million USD) -11,754-10,097-13,474-19,300-18,951
Trade Balance (Including Service) (million USD) -286-3,950-1,891-4,862-1,746
Imports of Goods and Services (Annual % Change) 6.7-12.317.326.5-5.3
Exports of Goods and Services (Annual % Change) 6.8-23.232.727.0-2.9
Imports of Goods and Services (in % of GDP) 50.948.352.565.754.8
Exports of Goods and Services (in % of GDP) 50.541.349.859.552.9

Source: World Bank ; Latest available data

Foreign Trade Forecasts 20242025 (e)2026 (e)2027 (e)2028 (e)
Volume of exports of goods and services (Annual % change) 1.52.82.82.82.8
Volume of imports of goods and services (Annual % change) 1.92.62.62.82.8

Source: IMF, World Economic Outlook ; Latest available data

Note: (e) Estimated Data

 
International Economic Cooperation
Slovenia is a member of the EU since July 1st, 2013 and as such is a member of the EU Customs Union. The Republic of Croatia has signed agreements on free trade with the countries of former Yugoslavia: Albania, Turkey, Moldova, and Macedonia.
 

Main Partner Countries

Main Customers
(% of Exports)
2023
Italy 12.2%
Germany 12.2%
Slovenia 11.2%
Bosnia and Herzegovina 10.1%
Hungary 6.9%
See More Countries 47.4%
Main Suppliers
(% of Imports)
2023
Italy 14.5%
Germany 14.2%
Slovenia 11.5%
Hungary 6.4%
Austria 5.5%
See More Countries 47.8%

Source: Comtrade, Latest Available Data

 

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Political Outline

Current Political Leaders
President: Zoran MILANOVIC (since 18 February 2020)
Prime Minister: Andrej PLENKOVIC (since 19 October 2016)
Next Election Dates
Presidential: 2030
Parliament: April 2028
Main Political Parties
Croatia has a multi-party system. The major political parties include:

- Croatian Democratic Union (HDZ): centre-right, socialist, conservative, advocates political and economic liberalisation, typically dominated the political scene since 1991 and is the current leader of the ruling coalition
- Social Democratic Party (SDP): centre-left, ex-communist party, it is the main opposition party
- Homeland Movement (DP): Croatian nationalism, social conservativism, Euroscepticism
- We Can!: left-wing, green
- The Bridge (MOST): centre, centre right, fiscal conservatism, liberalism
- Croatian Social Liberal Party (HSLS): centre to centre-right, conservative
- Croatian People's Party (HNS): centre, liberal, advocates economic reforms. Supports the current government
- Centre: liberal
- Home and National Rally (DOMiNO): right-wing
- Croatian Sovereignists: conservative, Christian right-wing
- Independent Platform of the North (NPS): regionalist, centrist
- Civic Liberal Alliance (GLAS): liberalism, social liberalism
- Istrian Democratic Assembly (IDS-DDI): Istrian regionalism, liberalism
- Croatian Peasant Party (HSS): agrarian, green liberalism
- Independent Democratic Serb Party (SDSS): Serb minority politics, advocates for social democracy.

Executive Power
The President is the head of state, elected by popular vote for a five-year term (renewable once). He can call for parliamentary elections under specific conditions but cannot dissolve Parliament unilaterally. He is also the commander-in-chief of the armed forces. The President appoints the Prime Minister (generally the leader of the majority party) with the consent of Parliament. The executive power is primarily held by the Prime Minister and the Cabinet, while the President has limited executive functions, mainly in foreign policy and defence.
Legislative Power
Legislative power is unicameral. The Parliament, called the Sabor, has 151 members elected by universal suffrage for a four-year term. Eight seats are reserved for ethnic minorities, including Serbs, Hungarians, Czechs, Slovaks, and others. The Constitution has been amended to transfer part of the President’s powers to Parliament.
 

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