According to a recent report by Capital Economics, Croatia has solidified its position as one of the fastest-growing economies in the European Union, projecting annual GDP growth of approximately 3% from 2024 to 2026.
Following a severe downturn during the global financial crisis, which saw GDP decline by 11% from 2008 to 2014 and unemployment peak at 17%, Croatia has experienced a robust recovery. Since 2015, the country has consistently grown economically, with a notable 2.8% GDP increase in 2023, positioning it as the EU's second-fastest growing economy after Malta. Unemployment dropped to a record low of 6.2% in 2023.
Key drivers of this growth include Croatia's thriving tourism sector, representing about a quarter of GDP, which rebounded strongly in 2023, surpassing pre-pandemic levels. Increased employment rates and substantial wage growth have further bolstered domestic demand. EU funds, amounting to 25% of GDP over the past decade, have played a crucial role in enhancing infrastructure, digitalization, and green initiatives.
Public finances have significantly improved, with Croatia's government debt decreasing from 86% of GDP in 2020 to 63% in 2023, marking one of the sharpest declines among EU countries besides Greece. The general budget achieved balance over 2022-2023, contrasting with deficits in other Central and Eastern European countries.
Looking ahead, GDP growth is expected to moderate to 2.0-2.5% by the end of the decade. Croatia's economic outlook remains optimistic, driven by EU funds and improved productivity, albeit contingent on addressing demographic challenges and implementing meaningful reforms.
