GDP, current US$ billion
GDP per capita, current US$
Life Expectancy at Birth, years (2018)
Croatia’s economy is recovering from the severe effects of the global financial crisis, with growth averaging around 3 percent over the past three years. Public finances have improved significantly: fiscal imbalances have been reduced and the country’s debt profile has improved from its initially very high levels. Joining the European Union (EU) in mid-2013 has helped boost exports from below 40 percent of GDP in 2008 to above 50 percent in 2018.
However, Croatia’s institutional challenges are evident in its uneven pattern of development. The country has not fully diversified its sources of growth, relying heavily on tourism, which might be vulnerable to the external environment. The aging population, increasing levels of outmigration, global trends of technological development, and the changing nature of work make it increasingly critical that Croatia prioritize actions now to improve its long-term growth potential. The prospective growth rate of roughly 2.5 percent over the medium term is not enough to reignite, much less accelerate, the pace of convergence with other countries in the EU.
With the right set of policy actions, Croatia can increase returns on public investment—by effectively using EU grant funds in the current and upcoming EU financing period—and attract strategic private investment to create economic opportunities. With the accession to the Euro Area as part of its medium-term agenda, Croatia is planning to implement ambitious reforms to boost growth, build economic resilience, and maximize the benefits of Euro Area membership. Critical reform areas include investments in human capital and natural resource management to preserve and leverage the country’s natural assets. However, the success of these reforms will ultimately rely on strengthening Croatia’s institutions.
Last Updated: Oct 21, 2019