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

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 20222023 (E)2024 (E)2025 (E)2026 (E)
GDP (billions USD) 70.5580.1986.3091.1896.38
GDP (Constant Prices, Annual % Change) 6.22.72.62.72.9
GDP per Capita (USD) 18,30520,87622,52023,76925,050
General Government Balance (in % of GDP) -0.5-1.3-2.1-1.3-0.9
General Government Gross Debt (in % of GDP) 68.863.861.860.358.5
Inflation Rate (%) n/a8.64.22.52.2
Unemployment Rate (% of the Labour Force) 6.86.35.95.65.6
Current Account (billions USD) -1.12-0.19-0.36-0.60-0.44
Current Account (in % of GDP) -1.6-0.2-0.4-0.7-0.5

Source: IMF – World Economic Outlook Database , Latest available data

Note: (e) Estimated Data

Main Sectors of Industry

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) 6.8 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 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 20182019202020212022
Imports of Goods (million USD) 28,20328,16026,83034,52744,301
Exports of Goods (million USD) 17,40217,18017,19321,87825,306
Imports of Services (million USD) 5,4855,6914,1315,3095,994
Exports of Services (million USD) 16,35917,17710,18016,87920,925
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
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
Foreign Trade (in % of GDP) 99.7101.690.0104.0125.9

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

 

Main Partner Countries

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

 
 

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 are:

- 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

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. 8 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: December 2023