Economic and Political Overview

flag Croatia Croatia: Economic and Political Overview

In this page: Economic Indicators | Foreign Trade in Figures | Sources of General Economic Information | Political Outline | COVID-19 Country Response

 

Economic Indicators

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 , Latest available data

Note: (e) Estimated Data

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.

 

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Monetary Indicators 20162017201820192020
Croatian Kuna (HRK) - Average Annual Exchange Rate For 1 MUR 0.190.190.190.190.17

Source: World Bank - Latest available data.

 
 

Find out all the exchange rates daily on our service Currency Converter.

Indicator of Economic Freedom

Definition:

The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.

Score:
63,6/100
World Rank:
79
Regional Rank:
38

Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation

 

Business environment ranking

Definition:

The business rankings model measures the quality or attractiveness of the business environment in the 82 countries covered by The Economist Intelligence Unit’s Country Forecast reports. It examines ten separate criteria or categories, covering the political environment, the macroeconomic environment, market opportunities, policy towards free enterprise and competition, policy towards foreign investment, foreign trade and exchange controls, taxes, financing, the labour market and infrastructure.

Score:
5.69/10
World Rank:
59/82

Source: The Economist Intelligence Unit - Business Environment Rankings 2020-2024

 

Country Risk

See the country risk analysis provided by Coface.

 

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Foreign Trade in Figures

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 Indicators 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
Imports of Goods and Services (Annual % Change) 6.6-12.417.625.0n/a
Exports of Goods and Services (Annual % Change) 6.8-23.336.425.4n/a
Imports of Goods and Services (in % of GDP) 51.048.552.765.3n/a
Exports of Goods and Services (in % of GDP) 50.641.551.360.6n/a
Trade Balance (million USD) -11,754-10,083-12,602-18,906n/a
Trade Balance (Including Service) (million USD) -289-3,948-1,023-4,355n/a
Foreign Trade (in % of GDP) 101.690.0104.0125.9n/a

Source: WTO – World Trade Organisation ; World Bank , Latest Available Data

 

Main Partner Countries

Main Customers
(% of Exports)
2023
Germany 12.2%
Slovenia 11.2%
Bosnia and Herzegovina 10.1%
Hungary 6.9%
Serbia 6.3%
See More Countries 53.4%
Main Suppliers
(% of Imports)
2023
Germany 14.2%
Slovenia 11.5%
Hungary 6.4%
Austria 5.5%
Poland 4.0%
See More Countries 58.4%

Source: Comtrade, Latest Available Data

 
 

Main Products

25.4 bn USD of products exported in 2022
Petroleum oils and oils obtained from bituminous...Petroleum oils and oils obtained from bituminous minerals (excl. crude); preparations containing >= 70% by weight of petroleum oils or of oils obtained from bituminous minerals, these oils being the basic constituents of the preparations, n.e.s.; waste oils containing mainly petroleum or bituminous minerals 6.3%
Electrical energyElectrical energy 5.8%
Petroleum gas and other gaseous hydrocarbonsPetroleum gas and other gaseous hydrocarbons 5.6%
Medicaments consisting of mixed or unmixed...Medicaments consisting of mixed or unmixed products for therapeutic or prophylactic uses, put up in measured doses "incl. those in the form of transdermal administration" or in forms or packings for retail sale (excl. goods of heading 3002, 3005 or 3006) 2.7%
Wood sawn or chipped lengthwise, sliced or peeled,...Wood sawn or chipped lengthwise, sliced or peeled, whether or not planed, sanded or end-jointed, of a thickness of > 6 mm 2.3%
See More Products 77.3%
44.1 bn USD of products imported in 2022
Petroleum gas and other gaseous hydrocarbonsPetroleum gas and other gaseous hydrocarbons 9.4%
Petroleum oils and oils obtained from bituminous...Petroleum oils and oils obtained from bituminous minerals (excl. crude); preparations containing >= 70% by weight of petroleum oils or of oils obtained from bituminous minerals, these oils being the basic constituents of the preparations, n.e.s.; waste oils containing mainly petroleum or bituminous minerals 6.9%
Electrical energyElectrical energy 5.1%
Motor cars and other motor vehicles principally...Motor cars and other motor vehicles principally designed for the transport of persons, incl. station wagons and racing cars (excl. motor vehicles of heading 8702) 3.4%
Petroleum oils and oils obtained from bituminous...Petroleum oils and oils obtained from bituminous minerals, crude 2.9%
See More Products 72.4%

Source: Comtrade, Latest Available Data

 
 

To go further, check out our service Import-Export Flows.

 
 

Main Services

Source: United Nations Statistics Division, Latest Available Data

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Sources of General Economic Information

Ministries
Ministry of Economy, Labour and Entrepreneurship
Ministry of Finance
Statistical Office
Croatian Bureau of Statistics
Central Bank
Croatian National Bank
Stock Exchange
Zagreb Stock Exchange
Search Engines
Pogodak
Croatian Web directory
Economic Portals
Croatian Information Centre

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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.

Type of State
Republic based on parliamentary democracy.
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.
 

Indicator of Freedom of the Press

Definition:

The world rankings, published annually, measures violations of press freedom worldwide. It reflects the degree of freedom enjoyed by journalists, the media and digital citizens of each country and the means used by states to respect and uphold this freedom. Finally, a note and a position are assigned to each country. To compile this index, Reporters Without Borders (RWB) prepared a questionnaire incorporating the main criteria (44 in total) to assess the situation of press freedom in a given country. This questionnaire was sent to partner organisations,150 RWB correspondents, journalists, researchers, jurists and human rights activists. It includes every kind of direct attacks against journalists and digital citizens (murders, imprisonment, assault, threats, etc.) or against the media (censorship, confiscation, searches and harassment etc.).

World Rank:
56/180
Evolution:
59/180
 

Indicator of Political Freedom

Definition:

The Indicator of Political Freedom provides an annual evaluation of the state of freedom in a country as experienced by individuals. The survey measures freedom according to two broad categories: political rights and civil liberties. The ratings process is based on a checklist of 10 political rights questions (on Electoral Process, Political Pluralism and Participation, Functioning of Government) and 15 civil liberties questions (on Freedom of Expression, Belief, Associational and Organizational Rights, Rule of Law, Personal Autonomy and Individual Rights). Scores are awarded to each of these questions on a scale of 0 to 4, where a score of 0 represents the smallest degree and 4 the greatest degree of rights or liberties present. The total score awarded to the political rights and civil liberties checklist determines the political rights and civil liberties rating. Each rating of 1 through 7, with 1 representing the highest and 7 the lowest level of freedom, corresponds to a range of total scores.

Ranking:
Free
Political Freedom:
1/7
Civil Liberties:
49/60

Political freedom in the world (interactive map)
Source: Freedom in the World Report, Freedom House

 

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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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Latest Update: April 2024