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
For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.
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). The economy was severely hit by the crisis linked to the covid-19 pandemic; however, it managed to recover and return to its pre-crisis level in 2021. GDP growth continued in 2022 (+5.9% as per the IMF estimates) thanks to a strong first half of the year on the back of domestic demand, but contracted in the third quarter (-0.4%) due to lower investment and government consumption in a context of tighter financing conditions, supply chain bottlenecks and soaring inflation. In 2023, real GDP is forecast to grow by 3.5% (IMF, 1.2% according to the EU commission) supported by the accession of Croatia to the euro (which was adopted on 1 January) and Schengen areas, although geopolitical tensions and a weaker global environment are set to weigh on external demand. For 2024, the IMF projects growth at 3% with household consumption as the most important contributor.
Croatia's public debt stood at 72.6% of GDP in 2022, returning around its pre-COVID level, with the ratio expected to decrease further this year (68.6%) and in 2024 (65.9%). In 2022, the general government deficit was estimated at 3.4% of GDP as despite the phasing out of support measures the government adopted several packages to fight inflation and the rise in energy prices. The 2023 budget draft envisages a general government budget deficit equivalent to 2.3% of GDP. The aforementioned rise in global energy and food prices contributed to a spike in inflation, which reached 9.8% in 2022, above the euro area average (8.4%). In 2023, base effects and a steeper decline in energy and food prices than previously expected are set to lower inflation to 5.5% and 3.9% in 2024.
According to IMF estimates, unemployment decreased to 6.9% in 2022, from 8.1% one year earlier, and is expected to follow a downward trend in 2023 (6.6%) and 2024 (6.1%). Real incomes are projected to start recovering in the second half of 2023, benefiting from lower inflation and a still resilient labour market, supporting a mild increase in household consumption. Though the average revenue of Croatians is still below the European one (with an estimated GDP per capita PPP of USD 37,550 in 2022 according to the IMF), Croatia remains the second most developed economy of the Balkan region, after Slovenia.
| Main Indicators | 2020 | 2021 | 2022 (E) | 2023 (E) | 2024 (E) |
|---|---|---|---|---|---|
| GDP (billions USD) | 57.58 | 68.89 | 71.02 | 78.88 | 82.96 |
| GDP (Constant Prices, Annual % Change) | -8.6 | 13.1 | 6.3 | 1.7 | 2.3 |
| GDP per Capita (USD) | 14,224 | 17,760 | 18,427 | 20,537 | 21,649 |
| General Government Balance (in % of GDP) | -5.6 | -3.5 | -2.1 | -2.8 | -1.9 |
| General Government Gross Debt (in % of GDP) | 86.8 | 78.6 | 67.5 | 65.2 | 64.2 |
| Inflation Rate (%) | -0.0 | 2.7 | 10.7 | 7.4 | 3.6 |
| Unemployment Rate (% of the Labour Force) | 9.0 | 8.1 | 6.8 | 6.4 | 6.0 |
| Current Account (billions USD) | -0.31 | 1.21 | -0.88 | -1.44 | -1.52 |
| Current Account (in % of GDP) | -0.5 | 1.8 | -1.2 | -1.8 | -1.8 |
Source: IMF – World Economic Outlook Database , Latest available data
Note: (e) Estimated Data
The agricultural sector represents only 2.9% 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 2022 was projected at HRK 8.7 billion, marking a growth of 1.1% y-o-y, while the value of real income in agriculture was estimated at HRK 12.7 billion (+0.8% y-o-y).
The secondary sector contributes 19.8% 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 11% of the national value added. Figures from the State Bureau of Statistics (DZS) show that industrial output grew 1.6% year-on-year in 2022, with the manufacture of vehicles registering the highest increase (26.4%).
The service sector represents 60.4% 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 2022 when Croatia welcomed 18.9 million tourists (37% more than the previous year) and generated USD 13.8 billion in revenues from foreign tourists. According to the latest data by the European Banking Federation, the Croatian banking sector performance kept up a strong tone in the first half of 2022 as ROA (return on assets) remained virtually unchanged at 1.2, while ROE (return on equity) showed ongoing improvement at 9.5%.
| Breakdown of Economic Activity By Sector | Agriculture | Industry | Services |
|---|---|---|---|
| Employment By Sector (in % of Total Employment) | 6.2 | 27.7 | 66.1 |
| Value Added (in % of GDP) | 2.9 | 19.8 | 60.4 |
| Value Added (Annual % Change) | 8.2 | 9.1 | 14.0 |
Source: World Bank - Latest available data.
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| Monetary Indicators | 2016 | 2017 | 2018 | 2019 | 2020 |
|---|---|---|---|---|---|
| Croatian Kuna (HRK) - Average Annual Exchange Rate For 1 MUR | 0.19 | 0.19 | 0.19 | 0.19 | 0.17 |
Source: World Bank - Latest available data.
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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.
Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation
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.
Source: The Economist Intelligence Unit - Business Environment Rankings 2020-2024
See the country risk analysis provided by Coface.
Croatia joined the WTO in 2000 and depends heavily on foreign trade, which amounts to 104% of the GDP (World Bank, latest data available). The country mainly exports petroleum oils (9.5%), electrical energy (5.2%), medicaments (3.4%), and wood (2.2%); while imports are driven by motor cars (4%), petroleum oils (6.5%), petroleum gas (3.8%), and medicaments (3.2% - data Comtrade).
In the first eleven months of 2022, the EU accounted for 68.7% of Croatian exports (mainly towards Italy, Hungary, Slovenia, and Germany). Bosnia and Herzegovina was the second single destination (10.4% of total exports). In the same period, the leading import origins were the EU (70.3%, reflecting the structure of exports’ destinations), Serbia (3.4%), Bosnia and Herzegovina (3.4%), and China (3.3% - data Croatian Bureau of Statistics).
In terms of merchandise, Croatia has a structural trade deficit: according to figures by WTO, in 2021 exports of goods totalled USD 22.8 billion (+32.8 y-o-y) while imports increased by 29.4%, to USD 34.5 billion. However, the country is a net exporter of services, with exports – at USD 16.7 billion – far above imports (USD 5.1 billion). According to figures by the World Bank, the overall trade deficit stood at an estimated 1.5% of GDP in 2020, much lower than the level of -7% recorded one year earlier. Preliminary figures from the Croatian Bureau of Statistics show that in the first eleven months of 2022, the value of Croatian merchandise exports totalled HRK 165.8 billion (EUR 22 billion), an increase of 32.1% over the same period of 2021, while the value of imports reached HRK 287.8 billion (EUR 38.2 billion), up by 48.5% year-on-year.
| Foreign Trade Indicators | 2017 | 2018 | 2019 | 2020 | 2021 |
|---|---|---|---|---|---|
| Imports of Goods (million USD) | 24,829 | 28,203 | 28,160 | 26,719 | 34,588 |
| Exports of Goods (million USD) | 16,069 | 17,402 | 17,180 | 17,167 | 22,812 |
| Imports of Services (million USD) | 4,574 | 5,430 | 5,573 | 3,932 | 5,163 |
| Exports of Services (million USD) | 15,054 | 16,354 | 17,162 | 9,714 | 16,770 |
| Imports of Goods and Services (Annual % Change) | 8.4 | 7.5 | 6.6 | -12.4 | 17.6 |
| Exports of Goods and Services (Annual % Change) | 6.9 | 3.7 | 6.8 | -23.3 | 36.4 |
| Imports of Goods and Services (in % of GDP) | 48.5 | 50.3 | 51.0 | 48.5 | 52.7 |
| Exports of Goods and Services (in % of GDP) | 49.1 | 49.4 | 50.6 | 41.5 | 51.3 |
| Trade Balance (million USD) | -9,538 | -11,440 | -11,754 | -10,083 | -12,602 |
| Trade Balance (Including Service) (million USD) | 584 | -648 | -289 | -3,948 | -1,023 |
| Foreign Trade (in % of GDP) | 97.6 | 99.7 | 101.6 | 90.0 | 104.0 |
Source: WTO – World Trade Organisation ; World Bank , Latest Available Data
| Main Customers (% of Exports) |
2022 |
|---|---|
| Italy | 12.2% |
| Slovenia | 11.6% |
| Germany | 11.4% |
| Hungary | 11.2% |
| Bosnia and Herzegovina | 10.4% |
| See More Countries | 43.2% |
| Main Suppliers (% of Imports) |
2022 |
|---|---|
| Italy | 13.8% |
| Germany | 12.5% |
| Slovenia | 10.8% |
| United States | 7.6% |
| Hungary | 7.3% |
| See More Countries | 48.0% |
Source: Comtrade, Latest Available Data
Source: Comtrade, Latest Available Data
To go further, check out our service Import Export Flows.
Source: United Nations Statistics Division, Latest Available Data
- 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
- Bridge of Independant Lists (MOST): centre, centre right, fiscal conservatism, liberalism
- Croatian Peasant Party (HSS): agrarian, green liberalism
- Civic Liberal Alliance (GLAS): liberalism, social liberalism
- Green–Left Coalition: left-wing ecologist political alliance
- Human Blockade (ŽZ): populism, pro-Russia
- Independent Democratic Serb Party (SDSS): Serb minority politics, advocates for social democracy
- Istrian Democratic Assembly (IDS-DDI): Istrian Regionalism, liberalism
- Bandić Milan 365 - Labour and Solidarity Party (BM 365): social-democracy, populism
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.).
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.
Political freedom in the world (interactive map)
Source: Freedom in the World Report, Freedom House
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Latest Update: September 2023
