Croatia

Croatia is located in southeastern Europe along the Adriatic coast. With an area of 56,594 km², it is the 27th largest country in the European Union. As of January 1, 2023, Croatia’s population is 3.8 million, with a population decrease of -1.1% compared to the previous year. The capital, Zagreb, has 800,000 residents, representing 21% of the total population, while the metropolitan area hosts around 1.2 million people. Other important cities include Split (178,102 residents) and Rijeka (128,624 residents).

Economic Outlook

In 2023, Croatia’s GDP is estimated at around €63 billion, with growth of +2.7% compared to 2022. GDP per capita is around €16,600. Exports FOB in 2023 amount to €22 billion, while imports CIF reach €30 billion, resulting in a trade deficit of €8 billion. Exports increased by +4.5%, while imports grew by +3.8%. The balance of payments recorded a deficit of €3 billion in 2023, improving from €3.5 billion in 2022. The public deficit for 2023 is estimated at €2 billion, or 3% of GDP. Public debt as of December 31, 2023, amounts to €40 billion, equivalent to 63% of GDP. Foreign direct investment (FDI) in Croatia was €2 billion in 2022, up from the previous year. The average exchange rate in 2023 was 7.5 kuna per euro. Inflation as of December 2023 is +5.3%. The unemployment rate in December 2023 is 6.5%, with youth unemployment (ages 15–24) at 15%. The average gross monthly salary in 2023 is approximately €1,400, while the average net salary is €1,000. The legal minimum wage is set at €700 per month as of January 2024, up from €600 in 2023. Around 17% of the population is at risk of poverty or social exclusion.

Forecasts

The National Forecast Commission projects economic growth of 3% in 2024, with GDP growth of 3.2% in 2025. Inflation is expected to decrease to 4% in 2024 and 3% in 2025. Croatia’s economy will continue to benefit from the tourism recovery and European investments, but it must address challenges related to sustainability and competitiveness.

Country Risk

Croatia has a moderate country risk, with a relatively stable political context and a growing banking system. However, public debt and the trade deficit could affect long-term economic stability.

Foreign Direct Investments

In 2022, FDI in Croatia focused primarily on tourism, real estate, and industry sectors. Major investors include Germany, Italy, and Austria. Croatia is expected to continue attracting investments, especially in renewable energy and infrastructure, thanks to favorable policies and European funding.

Geopolitical Analysis

Role in the European Union

Croatia became a member of the European Union in 2013, marking a significant phase in its European integration after years of conflict and post-communist transition. EU membership has facilitated access to European funds, contributing to infrastructure modernization and sustainable economic policies. However, Croatia faces the challenge of balancing domestic needs with EU expectations, particularly regarding governance and anti-corruption efforts. Croatia has also been a member of the Eurozone since 2023, which could further stabilize its economy and promote intra-European trade.

Regional Relations and Stability

Croatia occupies a strategic position in the Balkans, serving as a bridge between Central Europe and Southeastern Europe. Its relationships with neighboring countries, such as Serbia and Bosnia and Herzegovina, are complex and influenced by historical and ethnic issues. Croatia has actively promoted regional stability by supporting the European integration process for the Balkan countries. However, political tensions, such as those related to the Serbian issue in Croatia and minority rights, may pose challenges to regional cohesion.

Security and Defense

As a NATO member since 2009, Croatia has strengthened its ties with the Atlantic Alliance and participated in international peacekeeping missions. Its geographic location along the Adriatic coast and its border with the Balkans make it a key player in regional security. Croatia has also faced challenges related to immigration, with a flow of migrants from Asian and African countries, raising concerns about border management and internal security.

Relations with China

In recent years, Croatia has sought to expand its economic ties with China, primarily through infrastructure investments. However, there is concern about Chinese influence in the Balkans and the implications for European security. Croatia is trying to balance these relations with its commitment to the EU and Western alliances