Croatia flag Croatia: Economic outline

Economic Outline

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, 2016

Note: (e) Estimated Data

 
Monetary Indicators 20162017201820192020
Croatian Kuna (HRK) - Average Annual Exchange Rate For 1 GBP 9.198.528.388.258.48

Source: World Bank, 2015

 

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Latest Update: April 2024

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