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flag Croatia Croatia: Economic and Political Outline

In this page: Economic Indicators | Foreign Trade in Figures | Sources of General Economic Information | Political Outline

 

Economic Indicators

Croatia became the 28th member state of the EU on the 1st of July 2013. The Croatian economy, already oriented heavily towards Europe, remains nonetheless very dependent on the regional economic context in 2014. The country is in recession since 2009: -6% then -1.2% in 2010, 0% in 2011 followed by two years of decline -0.5% in 2012 and 0.6% in 2013.

Croatia adopted measures to boost its economy ahead of the financial crisis and had injected liquidity into the domestic banking sector which was then used to better cope with the effects of the crisis. However, today, looking at the evolution of household debt and business debt there are few signs of sustainable recovery. The forecast for 2014 also suggests stagnation. The crisis has highlighted the limits of the Croatian model, based on household consumption. The key economic drivers in 2013 - industry and construction -  showed negative growth rates. However tourism revenues, which stabilized in 2010, have increased regularly since 2011.

Croatia still needs to deal with a very high and fast increasing rate of unemployment: 16.2% in 2013 following 13.7% in 2012.

It seems that growth now depends on investment, on making use of the country's comparative advantages, on the rationalization of loss-making public companies and on modernizing the state administration. To face these challenges, the country will have to show a greater level of openness to direct foreign investment and work towards an improvement in the real wages/productivity ratio.

With its 4.3 million inhabitants, whose average revenue corresponds to 65% of the EU average, as well as an influential Diaspora, Croatia remains the second most developed economy of the Balkan region after Slovenia.

 
Main Indicators 20112012201320142015 (e)
GDP (billions USD) 61.5555.9857.37e58.3359.91
GDP (Constant Prices, Annual % Change) -0.2-2.2-0.9-0.80.5
GDP per Capita (USD) 14,37813,07713e13,62413,995
General Government Balance (in % of GDP) -3.8-2.0-4.4-3.3e-2.5
General Government Gross Debt (in % of GDP) 47.454.260.266.368.5
Inflation Rate (%) 2.33.42.2-0.30.2
Unemployment Rate (% of the Labor Force) 13.616.116.616.817.1
Current Account (billions USD) -0.54-0.070.511.27e1.33
Current Account (in % of GDP) -0.9-0.10.92.22.2

Source: IMF - World Economic Outlook Database , Last Available Data

Note: (e) Estimated Data

Main Sectors of Industry

The agricultural sector only represents 5% of the country's GDP. Croatia mainly produces wheat, corn, sugar beet, fruits, wine and olive oil.

The secondary sector represents 22% of the GDP. The Croatian industry is concentrated in competitive activities: textiles, wood, the steel industry, aluminum 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 73% of the GDP. The tourism sector is in full bloom. Croatia is welcoming almost 10 million visitors every year and the growth of this sector will be confirmed in the coming years with the development of  even more modern infrastructures.

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 13.7 27.4 58.7
Value Added (in % of GDP) 4.3 27.2 68.6
Value Added (Annual % Change) -1.6 -2.7 0.1

Source: World Bank - Last Available Data.

 
 
 
Monetary Indicators 20092010201120122013
Croatian Kuna (HRK) - Average Annual Exchange Rate For 1 USD 5.285.505.345.855.70

Source: World Bank - Last Available Data.

 
 

Learn more about Market Analyses about Croatia on Globaltrade.net, the Directory for International Trade Service Providers.

Indicator of Economic Freedom

Definition:

The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labor freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.

Score:
60.4/100
Position:
Moderately Free
World Rank:
87/178
Regional Rank:
36/43

Distribution of Economic freedom in the world
Source: 2014 Index of Economic freedom, Heritage Foundation

 

Business environment ranking

Definition:

The business rankings model measures the quality or attractiveness of the business environment in the 82 countries covered by The Economist Intelligence Unit’s Country Forecast reports. It examines ten separate criteria or categories, covering the political environment, the macroeconomic environment, market opportunities, policy towards free enterprise and competition, policy towards foreign investment, foreign trade and exchange controls, taxes, financing, the labour market and infrastructure.

Score:
6.33
World Rank:
52/82

Source: The Economist - Business Environment Rankings 2014-2018

 

Country Risk

See the country risk analysis provided by Coface.

 

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Foreign Trade in Figures

Croatia, which joined the WTO in 2000, became the 28th member State of the European Union on the 1st of July 2013. Its economy depends heavily on foreign trade. The foreign trade's contribution to the GDP was of more than 100% in 2013. Exports, which rose sharply in 2010 and 2011, namely in the petrochemical and marine construction sectors, dried up due to the slowdown of the Euro zone economies. This fact illustrates the heavy dependency of Croatia on the economic situation of the entire continent. The EU continues to represent over 60% of Croatia's exports and was for more than 63% in the country's imports.

Croatia's main suppliers in 2013 were Italy, Germany, Russia, China, Slovenia and Austria. Fuels, equipment, cars and machinery are significant import items.

Croatia mainly exports mineral fuels, ships, boats, electric & mechanical machinery, equipment, wood and wooden articles. Its main clients in 2013 were Italy, Bosnia-Herzegovina, Germany, Slovenia, but also Austria and Serbia.

The Croatian trade balance is regularly in deficit and with the effects of the crisis, this deficit became deeper due to the fall in exports. The revenues related  to tourism did help to compensate the global deficit. The most promising sectors in 2014 remains tourism, construction, telecommunications, and retail sales.

 
Foreign Trade Indicators 20092010201120122013
Imports of Goods (million USD) 21,20320,05422,71520,83220,917
Exports of Goods (million USD) 10,47411,80713,36412,34411,849
Imports of Services (million USD) 3,7913,4593,5773,5933,688
Exports of Services (million USD) 11,72511,57912,64411,93312,753
Imports of Goods and Services (Annual % Change) -20.4-2.52.5-3.03.2
Exports of Goods and Services (Annual % Change) -14.16.22.2-0.13.0
Imports of Goods and Services (in % of GDP) 38.238.240.941.142.5
Exports of Goods and Services (in % of GDP) 34.537.740.441.642.9
Trade Balance (million USD) -10,085-7,670-8,674-7,862-8,352
Trade Balance (Including Service) (million USD) -2,003-177224311717
Foreign Trade (in % of GDP) 72.875.981.382.785.4

Source: WTO - World Trade Organization ; World Bank , Last Available Data

 

Main Partner Countries

Main Customers
(% of Exports)
2013
Italy 14.5%
Bosnia and Herzegovina 12.3%
Germany 11.7%
Slovenia 10.4%
Austria 6.3%
See More Countries 44.8%
Main Suppliers
(% of Imports)
2013
Germany 14.0%
Italy 13.1%
Slovenia 11.5%
Austria 9.0%
Hungary 6.2%
See More Countries 46.2%

Source: Comtrade, Last Available Data

 
 

Main Products

- bn USD of products exported in 2013
Petroleum oils and oils obtained from bituminous...Petroleum oils and oils obtained from bituminous minerals (excl. crude); preparations containing >= 70% by weight of petroleum oils or of oils obtained from bituminous minerals, these oils being the basic constituents of the preparations, n.e.s.; waste oils containing mainly petroleum or bituminous minerals 9.5%
Medicaments consisting of mixed or unmixed...Medicaments consisting of mixed or unmixed products for therapeutic or prophylactic uses, put up in measured doses incl. those in the form of transdermal administration or in forms or packings for retail sale (excl. goods of heading 3002, 3005 or 3006) 3.9%
Electrical transformers, static converters, e.g....Electrical transformers, static converters, e.g. rectifiers, and inductors; parts thereof 2.5%
Wood sawn or chipped lengthwise, sliced or barked,...Wood sawn or chipped lengthwise, sliced or barked, whether or not planed, sanded or end-jointed, of a thickness of > 6 mm 2.5%
Petroleum gas and other gaseous hydrocarbonsPetroleum gas and other gaseous hydrocarbons 2.3%
See More Products 79.4%
- bn USD of products imported in 2013
Petroleum oils and oils obtained from bituminous...Petroleum oils and oils obtained from bituminous minerals, crude 9.0%
Petroleum oils and oils obtained from bituminous...Petroleum oils and oils obtained from bituminous minerals (excl. crude); preparations containing >= 70% by weight of petroleum oils or of oils obtained from bituminous minerals, these oils being the basic constituents of the preparations, n.e.s.; waste oils containing mainly petroleum or bituminous minerals 5.4%
Petroleum gas and other gaseous hydrocarbonsPetroleum gas and other gaseous hydrocarbons 3.5%
Medicaments consisting of mixed or unmixed...Medicaments consisting of mixed or unmixed products for therapeutic or prophylactic uses, put up in measured doses incl. those in the form of transdermal administration or in forms or packings for retail sale (excl. goods of heading 3002, 3005 or 3006) 2.9%
Electrical energyElectrical energy 2.8%
See More Products 76.5%

Source: Comtrade, Last Available Data

 
See More Products
More imports (Intracen Data)
More exports (Intracen Data)
 
 
 

Main Services

- bn USD of services exported in 2011
72.63%
10.56%
9.63%
2.43%
1.93%
1.39%
0.53%
0.45%
0.26%
0.19%
- bn USD of services imported in 2011
28.03%
24.26%
18.29%
7.49%
7.10%
4.66%
3.91%
3.02%
1.80%
1.38%
0.05%

Source: Comtrade, Last Available Data

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Sources of General Economic Information

Ministries
Ministry of Economy, Labour and Entrepreneurship
Ministry of Finance
Statistical Office
Croatian Bureau of Statistics
Central Bank
Croatian National Bank
Stock Exchange
Zagreb Stock Exchange
Search Engines
Pogodak
CroWeb media
Croatian Web directory
Economic Portals
SEEbiz.eu - Regional Business Multilanguage web portal covering Croatia, Serbia, Slovenia, Bosnia, Macedonia and Montenegro.
Croatian Information Centre

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Political Outline

Executive Power
The legislature is unicameral. The Parliament is a legislative body whose members are elected from party lists by popular vote to serve four-year terms. The constitution has been changed to shift power away from the President to the Parliament. People of Croatia have considerable political rights.
Legislative Power
President is the chief of the state, elected by popular vote for a five-year term. President can dissolve the Parliament and call for elections. President is also the commander-in-chief of the armed forces. The President appoints the Prime Minister and the Cabinet with the consent of Parliament. Prime Minister holds the executive powers.
Main Political Parties
Croatia has a multi-party system. The major political parties in the country are:
- HDZ (Croatian Democratic Union) - socialist, conservative, right-wing, advocates political and economic liberalization;
- SDP (Social democratic party) - left-wing, ex-communist party;
- HNS (Croatian People's Party - Liberal Democrats) - liberal, democratic, advoctes economic reforms,
- HSP (Croatian Party of Rights) - nationalist, right-wing, advocates ethno-centric politics;
- HSS (Croatian Peasant Party) - left-wing, conservative, advocates pro-agrarian policies;
- HSU (Croatian Pensioner Party) - protects the interest of pensioners, draws support from labour unions as well.,
Current Political Leaders
President: Kolinda Grabar-Kitarovic (since February 2015) - HDZ
Prime Minister: Zoran Milanovic (since December 2011) – SDP
Next Election Dates
Parliamentary: Expected late 2015
 

Indicator of Freedom of the Press

Definition:

The world rankings, published annually, measures the violations of press freedom worldwide. It reflects the degree of freedom enjoyed by journalists, the media and digital citizens of each country and the means used by states to respect and uphold this freedom. Finally, a note and a position are assigned to each country. To compile this index, Reporters Without Borders (RWB) prepared a questionnaire sent to partner organizations,150 RWB correspondents, journalists, researchers, jurists and activists of human rights, including the main criteria - 44 in total - to assess the situation of press freedom in a given country. It includes every kind of direct attacks against journalists and digital citizens (murders, imprisonment, assault, threats, etc.) or against the media (censorship, confiscation, searches and harassment etc.).

World Rank:
65/180
Evolution:
1 place down compared to 2013

Source: Worldwide Press Freedom Index 2014, Reporters Without Borders

 

Indicator of Political Freedom

Definition:

The Indicator of Political Freedom provides an annual evaluation of the state of freedom in a country as experienced by individuals. The survey measures freedom according to two broad categories: political rights and civil liberties. The ratings process is based on a checklist of 10 political rights questions (on Electoral Process, Political Pluralism and Participation, Functioning of Government) and 15 civil liberties questions (on Freedom of Expression, Belief, Associational and Organizational Rights, Rule of Law, Personal Autonomy and Individual Rights). Scores are awarded to each of these questions on a scale of 0 to 4, where a score of 0 represents the smallest degree and 4 the greatest degree of rights or liberties present. The total score awarded to the political rights and civil liberties checklist determines the political rights and civil liberties rating. Each rating of 1 through 7, with 1 representing the highest and 7 the lowest level of freedom, corresponds to a range of total scores.

Ranking:
Free
Political Freedom:
1/7

Map of freedom 2014
Source: Freedom House

 

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Last Updates: February 2015