CROATIA


The Land of unique beauty, ancient history and rich cultural heritage

Total area: 87,661 sq km
Population: 4.07 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: (Ms.) Kolinda GRABAR-KITAROVIC (since 19 February 2015))
Prime Minister:(Mr.) Tihomir ORESKOVIC (since 16 June 2016)
Date of EU accession: 1 July 2013
mapa


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

Croatia, a country with Mediterranean cultural and social environment and traditions, with an average annual GDP growth rate of 4.4% prior to the global crisis, has been one of the best performing transitional economies in this part of Europe.

Croatia joined the EU on July 1, 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. In 2017, the Croatian government decreased public debt to 78% of GDP, from an all-time high of 84% in 2014, and realized a 0.8% budget surplus - the first surplus since independence in 1991.


MACROECONOMIC OVERVIEW

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 grew by 2.8% in 2018 mainly driven by household consumption, while exports to non-EU countries slowed down. Overall, real GDP growth is forecasted to continue moderating to 2.6% in 2019 and further to 2.4% in 2020 (IMF). In the upcoming years private consumption is expected to remain the main driver of growth, supported by improving labour market conditions, modest inflation and low interest rates. Still, the crisis highlighted the limits of the Croatian model, which is dependent on household consumption and the European economic context, besides its limited economic diversification.

Croatia still suffers from high unemployment, large foreign debt (external debt roughly reaching the same size as its economy) and structural problems. 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; however, such efforts are hampered by stiff public and political resistance. Unemployment dropped to 12% in 2018 (from 12.4% in 2017), its lowest point since 2000. Though the rate remains high - with its 4.3 million inhabitants whose average revenue amounts to 59% of the EU average, as well as an influential diaspora - Croatia remains the second most developed economy of the Balkan region, after Slovenia.

The industrial sector is responsible for 25 percent of Croatia's GDP, with agriculture, forestry, and fishing accounting for the remaining 5 percent. About half of Croatia’s trade is with the “Euro-area” – countries that use the Euro – the source of about three-fourths of foreign direct investment (FDI) flows into the country. The EU market represents more than 60 percent of Croatia’s total exports. In the manufacturing sector, Croatia primarily exports low and medium-low technology. There are about 140,000 registered small and medium size enterprises (SMEs) in the country. The SME sector represents 67.2 percent of total employment, and 39 percent of Croatian SMEs are active in the service sectors


Selected economic indicators, Croatia, 2012 - 2018

    2012 2013 2014 2015 2016 2017 2018
GDP
Real GDP growth
%
-2.2
-1.1
-0.4
1.6
3.5
2.9
2.6
GDP at current prices
€ bn
43.48
43.56
43.02
43.90
46.63
48.98
51.46
Foreign trade
Exports
€ bn
19.00
18.66
19.91
21.68
22.73
25.02
26.36
Imports
€ bn
18.80
18.31
19.03
20.47
21.43
23.92
25.66
Balance
€ bn
0.20
0.35
0.88
1.20
1.3
1.1
0.7
Prices
CPI - average inflation rate
%
3.4
2.2
0.2
-0.3
-0.6
1.1
1.6
PPI - industry - average
%
5.4
-0.2
-2.5
-3.5
-4.0
2.1
2.0
Employment
Registered unemployment
%
16.1
16.5
17.1
16.3
15.5
12.4
12.0
Average monthly gross wage
1,047
1,047
1,042
1,058
1,030
1,082
1,139
Exchange rates
HRK/USD average
5.85
5.71
5.75
6.86
6.8
6.62
6.28
Currency board fixed rate: HRK/EUR
7.52
7.58
7.63
7.61
7.52
7.44
7.41

Source: Croatian Bureau of Statistics, Eurostat, IMF, 2017-2018



KEY SECTORS

The agricultural sector represents only 3% of the country's GDP and employs 7.3% of the workforce (World Bank). 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 21.6% of the GDP and employs 26.8% of the active population. Croatian industry is concentrated in competitive activities: textiles, wood, the 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 service sector represents 58.5% of the country’s GDP, employing 65.8% of the workforce. The tourism sector, in particular, is in full bloom: in 2017 it accounted for an estimated 10.9% of GDP (WTTC), while in the first nine months of 2018, around 18 million tourists visited Croatia, a record-breaking figure. 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, and is undertaking plans to open a floating liquefied natural gas (LNG) regasification terminal by the end of 2019 or early in 2020 to import LNG for re-distribution in southeast Europe.
Croatia belongs to the leading tourist destinations in the Mediterranean region.


FOREIGN DIRECT INVESTMENT (FDI)

Foreign Direct Investment in Croatia increased by EUR 56.80 million in the third quarter of 2018. FDI averaged EUR 402.98 million from 2000 until 2018, reaching an all time high of EUR 2058.70 million in the second quarter of 2014 and a record low of EUR -479.10 million in the fourth quarter of 2015.


EXPORTS & IMPORTS


2017 export and import data:




Main import partners:
Germany - 15.7%
Italy - 12.9%
Slovenia - 10.7%
Hungary - 7.5%
Austria - 7.5%


Main export partners:
Italy - 13.4%
Germany - 12.2%
Slovenia - 10.6%%
Bosnia Herzegovina - 9.8%
Austria - 6.2%


Croatia external trade - 2015




See references for our track record in Croatia.



•


Market Research in Croatia

EasyLink provides professional expertise in strategic market research, market intelligence, competitive intelligence, market size analysis and market potential evaluation, competitive landscape and distribution structure study, identification of new customers and potential partners etc. Please contact us to discuss how we can assist your business objectives in export, marketing or sourcing.


Customer Search & Partner Search in Croatia

We are experienced experts in matchmaking projects involving the search, identification, screening and pre-selection of business partners in Central & Eastern Europe, ranging from distributor search to profiling of prospective customers and identifying specific business opportunities; we assist our clients with sourcing in emerging markets and low-cost markets in the CEE region.


International Trade Consultancy - Export, Marketing and Trade Promotion in Croatia and the CEE region

EasyLink has a unique track record in international trade promotion. With local consultants in all key markets in Central & Eastern Europe, EU markets and some overseas markets, we provide customized market research, develop trade opportunities with prospective partners and new customers, and assist clients with strategic advice for their export, marketing and sourcing needs.