Economy - overview: Though still one of the wealthiest of the former Yugoslav republics, Croatia's economy suffered badly during the 1991-95 war. The country's output during that time collapsed, and Croatia missed the early waves of investment in Central and Eastern Europe that followed the fall of the Berlin Wall. Between 2000 and 2007, however, Croatia's economic fortunes began to improve with moderate but steady GDP growth between 4% and 6%, led by a rebound in tourism and credit-driven consumer spending. Inflation over the same period remained tame and the currency, the kuna, stable.
Croatia experienced an abrupt slowdown in the economy in 2008 and is slowly recovering; economic growth was stagnant or negative in each year since 2009, but picked up in 2015-16. Difficult problems still remain including a stubbornly high unemployment rate, uneven regional development, and a challenging investment climate. In 2016 Croatia demonstrated a commitment to improving the business climate, simplifying its tax code to stimulate growth from domestic consumption and foreign investment. Even before 2016, Croatia has worked to become a regional energy player and plans to import liquefied natural gas through a prospective import terminal and re-export it to European consumers.
On 1 July 2013, Croatia joined the EU, following a decade-long application process. Croatia will be a member of the European Exchange Rate Mechanism, with its currency effectively pegged to the euro, until it meets the criteria for joining the Economic and Monetary Union and adopts the euro as its currency. EU accession has increased pressure on the government to reduce Croatia’s relatively high public debt, which triggered the EU’s excessive deficit procedure for fiscal consolidation. Zagreb has cut spending since 2012, and the government also raised additional revenues through more stringent tax collection and by raising the value-added tax. The government has also sought to accelerate privatization of non-strategic assets, with mixed success.
Definition: This entry briefly describes the type of economy, including the degree of market orientation, the level of economic development, the most important natural resources, and the unique areas of specialization. It also characterizes major economic events and policy changes in the most recent 12 months and may include a statement about one or two key future macroeconomic trends.
Source: CIA World Factbook - This page was last updated on January 20, 2018