Chorvatsko
The Land of unique beauty, ancient history and rich cultural heritage
Total area: 56,594 sq km
Population: 3.8 million
Government type: Parliamentary democracy
Administrative division: 20 counties called “zupanija”
Capital + other major cities: Zagreb (790,00) + Split (178,000), Rijeka (129,000), Osijek (108,000)
Currency: Kuna (HRK)
Languages: Croatian (official) 95.6%, Serbian 1.2%, other 3%
Ethnicity: Croat 90.4%, Serb 4.4%, other 4.4%
Religion: Roman Catholic 86.3%, Orthodox 4.4%, Muslim 1.5%, other 1.5%, unspecified 2.5%, not religious or atheist 3.8%
President: (Mr.) Zoran MILANOVIĆ (since 5 January 2020)
Prime Minister: (Mr.) Andrej PLENKOVIĆ (since 19 October 2016)
Date of EU accession: 1 July 2013
KEY FEATURES
- Tourism dominates the Croatian service sector and accounts for up to 20% of Croatian GDP
- Newest EU member
- Service-based economy – 70% of GDP
- Shipbuilding is a mainstay of manufacturing
- NATO member since 2009
- High emigration of (especially) young people
MACROECONOMIC OVERVIEW
The Balkan country, whose economic transformation in the 1990s was negatively affected by the war, joined the EU in 2013, following a decade-long accession process. Croatia has developed a plan for Eurozone accession, and the government projects Croatia will adopt the Euro by 2024. This means that Croatia has confirmed its stable macroeconomic position by meeting economic and legal requirements such as stable inflation, low government deficits, or political stability. The country also aspires to join the Schengen area shortly. With a 70% level of GDP per capita in the EU, Croatia is still at the tail end of the EU countries (although ahead of Slovakia, Greece, and Bulgaria) but is slowly catching up with the advanced countries. The state retains a strong role in the economy. The country needs to continue with restructuring of the public sector and privatisation of state industries.
Croatia has experienced moderate economic growth and government budget surpluses in recent years. In 2019, the Croatian government decreased the relatively high public debt to 74.9% of GDP, but it reached a new high in the following year, mainly due to fiscal measures implemented to support areas affected by the Covid-19 pandemic. The economy declined sharply in 2020, but in 2021 the country recorded the second-highest growth in the EU, reaching double-digit GDP growth. The country is successfully tackling the high unemployment rate.
Selected economic indicators, Croatia, 2015 - 2021
| 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | ||
| GDP |
|
|
|
|
|
|
|
|
| Real GDP growth |
%
|
2.5 | 3.5 | 3.4 | 2.9 | 3.5 | -8.1p | 10.2p |
| GDP at current prices |
€ bn
|
44.62
|
46.62
|
49.09
|
51.63
|
55.57
|
50.18
|
57.19
|
| Foreign trade |
|
|
|
|
|
|
|
|
| Exports |
€ bn
|
20.69
|
22.2
|
24.56
|
26.07
|
28.2
|
21.09
|
29.45
|
| Imports |
€ bn
|
20.60
|
21.68
|
24.26
|
26.51
|
28.37
|
24.48
|
30
|
| Balance |
€ bn
|
0.09
|
0.525
|
0.3
|
-0.44
|
-0.17
|
-3.39
|
-0.54
|
| Prices |
|
|
|
|
|
|
|
|
| CPI – average inflation rate |
%
|
-0.3 | -0.6 | 1.3 | 1.6 | 0.8 | 0.0 | 2.7 |
| PPI – industry – average |
%
|
-3.7 | -4.0 | 2.1 | 2.0 | 0.7 | -3.3 | 8.0 |
| Employment |
|
|
|
|
|
|
|
|
| Registered unemployment |
%
|
16.2
|
13.1
|
11.2
|
8.5
|
6.6
|
7.5
|
7.6
|
| Average monthly gross wage |
€
|
1,058
|
1,030
|
1,082
|
1,139
|
1,220
|
1,222
|
1,274
|
| Exchange rates |
|
|
|
|
|
|
|
|
| HRK/USD average |
|
6.86 | 6.8 | 6.62 | 6.28 | 6.63 | 6.61 | 6.36 |
| Currency board fixed rate: HRK/EUR |
|
7.61 | 7.52 | 7.44 | 7.41 | 7.41 | 7.54 | 7.53 |
Source: Croatian Bureau of Statistics, Eurostat, IMF, ECB, OECD, World Bank, 2015-2021
KEY SECTORS
The agricultural sector represents only 4% of the country’s GDP and employs 7% of the workforce. Croatia has 1.3 million hectares of agricultural land and almost 2.2 million hectares of forests. 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).
The secondary sector contributes 26% of the GDP and employs 26% of the active population. Croatian industry is concentrated in competitive activities: textiles, wood, the steel industry, aluminium, pharmaceuticals 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. Conversely, the engineering industry is underdeveloped and the consumers are dependent on imports. The country has limited mineral resources.
The service sector represents 70% of the country’s GDP, employing 67% of the workforce. The tourism sector, in particular, is in full bloom: in 2019 it accounted for an estimated 17% of GDP (WTTC), and for 2019, the country recorded 21 million incoming tourists, which is the highest number in its history. The touristic boom should be strengthened in the coming years with the development of additional modern infrastructure to receive foreign visitors.
Croatia is working to become a regional energy hub: in January 2021, a liquefied natural gas (LNG) terminal started operating on the island Krk delivering gas through the transmission network to Slovenia, Italy, Hungary, Serbia and Montenegro.
EXPORTS & IMPORTS
Exports of goods and services in GDP was 51.5% in 2021. Half of the total exports are related to services, especially tourism which compensates the negative balance of exported goods. In the manufacturing sector, Croatia primarily exports low and medium-low technology.
EXPORTS & IMPORTS
2021 export and import data:
Main import partners:
Germany – 14.8%
Italy – 12.6%
Slovenia – 11%
Hungary – 7.3%
Austria – 6.4%
Main export partners:
Slovenia – 12.7%
Italy – 12.5%
Germany – 11.8%
Hungary – 9.1%
Bosnia Herzegovina – 8.5%
Austria – 5.6%
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