Croatia Economic Forecast

Croatia Economic Outlook

October 2, 2018

Healthy economic activity seems to have held up in the third quarter, following a solid second-quarter expansion that was chiefly driven by external demand. The labor market continued to improve, reflected by the unemployment rate hitting all-time lows in July and again in August. Despite inflation firming up recently, robust gains in nominal wages have propped up real household incomes, likely contributing to the modest rise in annual retail sales growth in July. Although the number of tourist arrivals dropped slightly in year-on-year terms in the same month, they rose solidly on aggregate in January through July, pointing to another record year for tourist visits. Meanwhile, on 21 September, S&P Global Ratings revised Croatia’s credit rating outlook from stable to positive, owing to their expectations that the economy will continue to strengthen and its fiscal and debt metrics improve.

Croatia Economic Growth

Solid growth is expected to continue next year, underpinned by healthy gains in private consumption and increased capital spending. A dynamic tourism industry should also contribute to maintain a healthy current account surplus. Meanwhile, risks associated to the disorderly restructuring of Agrokor, the country’s largest private employer, have dissipated after creditors reached a debt-settlement deal in July. Downside risks to the outlook stem mainly from the external environment in which an escalation of the China-U.S. trade war or a slowdown in Italy and Germany, Croatia’s main trading partners, could dent export activity. FocusEconomics panelists project GDP growth of 2.7% in 2018 and 2.7% again in 2019, unchanged from last month’s forecast.

Croatia Economy Data

Population (million)
GDP per capita (EUR)10,33810,38210,70411,27111,810
GDP (EUR bn)
Economic Growth (GDP, annual variation in %)-0.5-
Consumption (annual variation in %)-1.9-
Investment (annual variation in %)1.4-
Industrial Production (annual variation in %)-
Retail Sales (annual variation in %)-
Unemployment Rate21.519.417.614.712.2
Fiscal Balance (% of GDP)-5.3-5.1-3.4-0.90.8
Public Debt (% of GDP)80.584.083.880.678.0
Money (annual variation in %)11.59.611.418.219.1
Inflation Rate (CPI, annual variation in %, eop)0.3-0.5-0.60.2-  
Inflation Rate (HICP, annual variation in %)2.30.2-0.3-0.61.3
Inflation (PPI, annual variation in %)-0.2-2.5-3.7-4.32.0
Policy Interest Rate (%)
Stock Market (annual variation in %)3.1-3.1-2.818.1-7.6
Exchange Rate (vs EUR)7.627.667.647.557.43
Exchange Rate (vs EUR, aop)7.587.637.617.537.46
Current Account (% of GDP)
Current Account Balance (EUR bn)
Trade Balance (EUR billion)-6.6-6.5-7.0-7.3-8.2
Exports (EUR billion)8.99.410.210.511.7
Imports (EUR billion)15.516.017.217.919.8
Exports (annual variation in %)
Imports (annual variation in %)
International Reserves (EUR)12.912.713.713.515.7
External Debt (% of GDP)10510610188.682.6

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Croatia Facts

Bond Yield2.160.0 %Oct 12
Exchange Rate6.41-0.54 %Oct 12
Stock Market1,773-0.48 %Oct 12

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