Croatia : Small but Attractive Market

The Republic of Croatia enjoys international fame for its long Adriatic coastline dotted with hundreds of beautiful islands. These are the basis for the country being one of the top 20 tourist destinations in the world. Around 10 million visitors go to Croatia every year.

However, its main economic strength is also a weakness: there is over-reliance on tourism. This sector contributes about 20% to the Gross Domestic Product (GDP), making the country vulnerable to changes in travel habits.

Following the global financial crisis of 2008, Croatia lost almost one-sixth of its economic base. Today, it is still in the process of recovery.

It has a population of only 4.3 million – and the number has been shrinking in recent years. Unemployment, recorded at about 18%, is painfully high, while youth unemployment at 45% is a particular problem. Public debt, at 85% of GDP, is another area of serious concern.

Once a part of Yugoslavia, Croatia joined the European Union (EU) only in 2013. Certain structural reforms are still pending to the labour market and public enterprises, among other sectors. In order to comply fully with EU standards, the reforms will have to be carried out.

According to Eurostat, Croatia’s GDP per head at purchasing power parity in 2014 was EUR 16,100 – third-lowest in the EU, after Romania and Bulgaria. However, it was more or less on par with that of Hungary and Poland, which had both joined the EU a decade before Croatia.

In 2015, Croatia returned to growth for the first time since 2008. Although its overall economy remains relatively weak, the food processing industry shines as the dominating sector.

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