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Economic Overview

After becoming the 28th member state of the EU on July 1, 2013, the Croatian economy was only able to return to growth in 2015: since 2008, the country had experienced six consecutive years of economic recession, with the GDP falling by 12% (EU data). In recent years, the country managed to recover and return to its pre-crisis level already in 2021. After growing 6.2% in 2022, Croatia's GDP growth is estimated to have remained robust at 2.7% last year. Economic activity was buoyed by domestic demand, with private consumption benefiting from favorable wage trends and positive consumer sentiment. Strong investment growth was bolstered by EU funds. In 2024, real GDP is expected to grow by 2.6%, primarily driven by robust domestic demand and reflecting substantial carry-over effects from previous periods (IMF). Investment and public consumption growth are projected to slow down but maintain strength, given the ongoing execution of the Recovery and Resilience Plan and anticipated improvements in financing conditions.

Croatia's public debt stood at 63.8% of GDP in 2023, down from 68.8% one year earlier, with the ratio expected to decrease further this year (61.8%) and in 2025 (60.3%). In 1H23, budget performance demonstrated strength due to the surge in indirect tax revenues driven by elevated inflation. However, expenses escalated in the latter part of the year due to the costs associated with pension indexation, the recent support package, and the increments in public sector wages. The overall budget deficit was estimated at 1.3% of GDP by the IMF. Lower nominal growth and adjustments to personal income taxation and social contribution rates should lead to diminished budget revenues in 2024, resulting in a projected deficit of 2.1% of GDP (IMF). In 2023, HICP inflation dropped to 8.6%, down from 10.7% in 2022, with inflation excluding energy and food reaching 8.8%. Both surpassed the respective euro area rates of 5.4% and 5%. The slowdown in HICP inflation throughout 2023 was primarily influenced by declines in energy and processed food prices. Meanwhile, services inflation demonstrated greater persistence. Inflation is anticipated to reach 4.2% and 2.5% in 2024 and 2025, respectively, with the prices of energy and unprocessed food forecasted to be the main drivers of the downward trend. Meanwhile, services inflation is expected to remain relatively stable.

According to IMF estimates, unemployment decreased to 6.3% in 2023, from 6.8% one year earlier, and is expected to follow a downward trend in 2024 (5.9%) and 2025 (5.6%). The government sector is anticipated to provide substantial support to wage growth, particularly with significant (one-off) increases expected as part of the public sector wage-setting reform. Though the average revenue of Croatians is still below the European one (with an estimated GDP per capita PPP of USD 40,380 in 2022 according to the World Bank), Croatia remains the second most developed economy of the Balkan region, after Slovenia.

 
Main Indicators 20222023 (E)2024 (E)2025 (E)2026 (E)
GDP (billions USD) 71.6682.0488.0892.3297.05
GDP (Constant Prices, Annual % Change) 6.32.83.02.72.7
GDP per Capita (USD) 18,58321,34722,96624,11125,391
General Government Balance (in % of GDP) -0.8-0.5-1.9-1.5-1.2
General Government Gross Debt (in % of GDP) 68.263.559.558.457.1
Inflation Rate (%) 10.78.43.72.22.2
Unemployment Rate (% of the Labour Force) 6.86.25.85.55.5
Current Account (billions USD) -2.001.021.280.860.37
Current Account (in % of GDP) -2.81.21.50.90.4

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 3.1% of the country's GDP and employs 6% 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 net added value of the agricultural sector for 2023 was projected at EUR 1.8 billion, marking a decrease of 2.3% in relation to the previous year. Concerning the value of agricultural production, the latest projection pointed to an increase of 0.8%, to EUR 3.2 billion.

The secondary sector contributes 19.9% of GDP and employs 28% 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. Figures from the State Bureau of Statistics (DZS) show Croatia's industrial output dipped 0.1% on the year in 2023, after growing 1.6% one year earlier.

The service sector represents 60.9% of the country’s GDP, employing 66% of the workforce. The tourism sector, in particular, is among the key segments of the Croatian economy, accounting for almost a quarter of GDP, by far the largest share in the EU. After being hit hard by the economic crisis following the COVID-19 pandemic, the tourism sector recovered in 2023, welcoming 20.6 million travelers who made 108 million overnight stays, which was 9% and 3% higher compared to 2022, equaling the 2019 record year (DZS). Five foreign-owned banks control over 80% of total assets and net profit in the country's banking system (S&P).

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 6.8 28.8 64.4
Value Added (in % of GDP) 2.5 19.5 61.3
Value Added (Annual % Change) 6.0 2.4 7.8

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 125% of the GDP (World Bank, latest data available). The country mainly exports petroleum oils (6.3%), electrical energy (5.8%), petroleum gas and other gaseous hydrocarbons (5.6%), medicaments (2.7%), wood sawn or chipped lengthwise (2.3%); while imports are driven by petroleum gas and other gaseous hydrocarbons (9.4%), petroleum oils (non-crude) (6.9%), electrical energy (5.1%), motor cars and other motor vehicles (3.4%), petroleum oils and oils (crude) (2.9% - data Comtrade 2022).

In 2022, the main export partners were Italy (12.2%), Slovenia (11.6%), Germany (11.4%), Hungary (11.2%), and Bosnia and Herzegovina (10.4%). In the same period, the leading import origins were Italy (13.8%), Germany (12.5%), Slovenia (10.8%), the United States (7.6%), and Hungary (7.3% - Comtrade). Overall, the EU accounted for 68.7% of total exports and 70.4% for imports (DZS).

In terms of merchandise, Croatia has a structural trade deficit: according to figures by the WTO, in 2022 exports of goods totaled USD 25.3 billion (+15.6% y-o-y) while imports increased by 28.3%, to USD 44.3 billion. However, the country is a net exporter of services, with exports – at USD 20.9 billion – far above imports (USD 6 billion). According to figures by the World Bank, the overall trade deficit stood at an estimated 6.2% of GDP in 2022, much higher than the level of 2.7% recorded one year earlier. Preliminary figures from the Croatian Bureau of Statistics show that in 2023 exports declined by 5.3% year-on-year to EUR 22.834 billion, while imports saw a 6% decrease to EUR 39.373 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 20182019202020212022
Foreign Trade (in % of GDP) 99.7101.690.0104.0125.9
Trade Balance (million USD) -11,440-11,754-10,083-12,602-18,906
Trade Balance (Including Service) (million USD) -648-289-3,948-1,023-4,355
Imports of Goods and Services (Annual % Change) 7.56.6-12.417.625.0
Exports of Goods and Services (Annual % Change) 3.76.8-23.336.425.4
Imports of Goods and Services (in % of GDP) 50.351.048.552.765.3
Exports of Goods and Services (in % of GDP) 49.450.641.551.360.6

Source: World Bank ; Latest available data

Foreign Trade Forecasts 20232024 (e)2025 (e)2026 (e)2027 (e)
Volume of exports of goods and services (Annual % change) -2.91.52.82.82.8
Volume of imports of goods and services (Annual % change) -5.31.92.62.62.8

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)
2022
Slovenia 11.6%
Germany 11.4%
Hungary 11.2%
Bosnia and Herzegovina 10.4%
Serbia 6.2%
See More Countries 49.2%
Main Suppliers
(% of Imports)
2022
Germany 12.5%
Slovenia 10.8%
United States 7.6%
Hungary 7.3%
Austria 5.2%
See More Countries 56.7%

Source: Comtrade, Latest Available Data

 

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Political Outline

Current Political Leaders
President-elect: Zoran MILANOVIC (since 18 February 2020)
Prime Minister: Andrej PLENKOVIC (since 19 October 2016)
Next Election Dates
Presidential: 2024
Assembly: 2024
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 Democrats: centre-left. It was founded in 2022 by a parliamentary group that left the Social Democratic Party
- Social Democratic Party (SDP): centre-left, ex-communist party, it is the main opposition party
- Homeland Movement (DP): Croatian nationalism, social conservativism, Euroscepticism
- Croatian People's Party (HNS): centre, liberal, advocates economic reforms. Supports the current government
- The Bridge (MOST): centre, centre right, fiscal conservatism, liberalism
- Croatian Peasant Party (HSS): agrarian, green liberalism
- Workers' Front (RF): left-wing
- Civic Liberal Alliance (GLAS): liberalism, social liberalism
- Croatian Social Liberal Party (HSLS): centre to centre-right, conservative
- Centre: liberal
- Green–Left Coalition: left-wing ecologist political alliance
- Independent Democratic Serb Party (SDSS): Serb minority politics, advocates for social democracy
- Istrian Democratic Assembly (IDS-DDI): Istrian Regionalism, liberalism.

Executive Power
The President is the chief of the state, elected by popular vote for a five-year term (renewable once). He can dissolve the Parliament and call for elections and is also the commander-in-chief of the armed forces. The President appoints the Prime Minister (generally the leader of the majority party) and the Cabinet with the consent of Parliament. The President, the Prime Minister and the Cabinet hold the executive powers.
Legislative Power
Legislative power is unicameral. The 151 members of parliament, called the Sabor, are elected by universal suffrage for a four-year term. Eight seats are reserved for ethnic minorities (Serbs, Hungarians, Czech, Slovaks, etc.).
The Constitution has been amended to transfer part of the powers of the President to parliament.
 

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COVID-19 Country Response

Travel restrictions
Regularly updated travel information for all countries with regards to Covid-19 related entry regulations, flight bans, test and vaccines requirements is available on TravelDoc Infopage.
To find information about the current travel regulations, including health requirements, it is also advised to consult Travel Regulations Map provided and updated on a daily basis by IATA.
Import & export restrictions
A general overview of trade restrictions which were adopted by different countries during the COVID-19 pandemic is available on the International Trade Centre's COVID-19 Temporary Trade Measures webpage.
Economic recovery plan
The summary of the EU’s economic response to the COVID-19 pandemic is available on the website of the European Council.
For the general overview of the key economic policy responses to the COVID-19 outbreak (fiscal, monetary and macroeconomic) in Croatia, please consult the country's dedicated section in the IMF’s Policy Tracker platform.
Support plan for businesses
For an evaluation of impact of the Covid pandemic on SMEs and an inventory of country responses to foster SME resilience, refer to the OECD's SME Covid-19 Policy Responses document.
You can also consult the World Bank's Map of SME-Support Measures in Response to COVID-19.

 

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