Croatia overview

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In Croatia we focus on:

  • Supporting efforts to accelerate the reform process: The Bank’s engagement in Croatia in the new strategy period which started in 2017-stands to gain significantly from acceleration in the pace of the reform process. Accordingly, the EBRD will aim to enhance the impact of its investments as well as leveraging available EU funds for Croatia. The Bank will also closely co-ordinate with other IFIs, including the EIB and World Bank Group.
  • Support private sector competitiveness through fostering innovation, operational and resource efficiency, as well as improvement of the business climate and economic inclusion. After a prolonged recession Croatia has now returned to growth. The next challenge is to tackle structural vulnerabilities and institutional deficiencies hampering competitiveness of the corporate sector, in particular micro, small and medium enterprises (MSMEs). The Bank continues to support larger domestic corporates and small and medium enterprises seeking to adopt modern operational and management practices, and foreign direct investments (FDIs) that produce technology transfers and serve to integrate local economy into global value chains.
  • Deepening financial markets to broaden access to finance with focus on capital markets developments. As small businesses’ access to finance remains constrained, the EBRD continues to provide long term funding directly to local companies and through partner financial institutions and, whenever possible, blend the financing with capacity building. The Bank will continue providing SME advisory through the Advice for Small Businesses programme. In line with the objectives of the European Commission's Capital Markets Union initiative, the Bank will put emphasis on the development of local capital markets.
  • Promote commercialisation of public companies, including the improvement of corporate governance, and support the privatisation of some state-owned companies. The Bank is working with the state and local authorities to accelerate the reform of public companies through promotion of commercialisation and increased private sector participation.
  • Croatia corporate productivity
  • Croatia SOE performance

The EBRD’s latest strategy for Croatia was adopted on 7 June 2017

Croatia's policy response to the coronavirus crisis

The EBRD is monitoring Croatia's policy response to the coronavirus pandemic. Our biweekly publication identifies the major channels of disruption as well as selected impact and response indicators.

Learn more

EBRD forecast for Croatia's real GDP growth in 2022 3.0%

EBRD forecast for Croatia's real GDP growth in 2023 3.5%

After a steep drop of 8.1 per cent in 2020, the Croatian economy expanded by 10.4 per cent in 2021. Growth was broad-based in 2021, with private consumption, net exports, and investment recording significant improvements. The tourism sector recovered strongly, with visitor stays in 2021 at about 90 per cent of 2019 figures. However, in the fourth quarter of 2021 GDP declined by 0.1 per cent quarter-on-quarter, and figures for retail turnover in January and February 2022 showed a weakening economy, as real income growth was marginally negative. The unemployment rate fell to 6.6 per cent in March 2022, implying good prospects for the labour market. Nevertheless, as in other countries in the region, inflation will continue to affect consumer demand, although the extent of the increase has been more muted when compared with regional peers, with the rate reaching 7.3 per cent in March 2022.

In reaction to increasing prices, the authorities announced a package of measures in February 2022 focused mainly on decreasing VAT rates on critical products and energy subsidies to vulnerable households. Regulated energy prices will continue to limit the full pass-through to the economy. The fiscal space improved visibly in 2021 and the government is targeting a considerable consolidation in 2022, aiming to bring the general government deficit below 3 per cent of GDP, in light of euro adoption planned for January 2023. On the monetary side, long-term yields spiked from about 0.5 per cent at end-2021 to over 2.0 per cent by mid-April 2022, in line with regional peers and repricing at the EU level.

GDP growth is expected to fall to around 3 per cent in 2022 on the back of a slowdown in private consumption and goods exports, while investment should remain robust amid the earthquake reconstruction efforts. In 2023, a slowdown in inflation, Eurozone entry and EU funds could bring growth to 3.5 per cent, with upside potential for even higher growth. Downside risks from a potential shutdown of energy imports from Russia are mitigated by the country’s limited dependence on Russian gas and the presence of an LNG terminal.

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