Economy of Croatia

Up to the 20th century

When Croatia was still part of the Austro-Hungarian Empire, its economy maintained a large agricultural sector with industrialization spreading through larger cities. The Kingdom of Croatia had a high ratio of population working on farmland. Many industrial branches developed in that time, like forestry and wood industry (stave fabrication, the production of potash, lumber mills, shipbuilding). The most profitable one was stave fabrication, the boom of which started in the 1820s with the clearing of the oak forests around Karlovac and Sisak and again in the 1850s with the marshy oak masses along the Sava and Drava rivers. Shipbuilding in Croatia played a significant role in the 1850s Austrian Empire, especially the long-range sailing boats. Sisak and Vukovar were the major centers of river-shipbuilding.^[44] Slavonia was mostly an agricultural land and was known for its silk production. Agriculture and the breeding of cattle were the most profitable occupations of locals. The region produced corn of all kinds, hemp, flax, tobacco, and great quantities of licorice.^[45][46]

Initial industrialization began in the 1830s and in the following decades the construction of big industrial enterprises took place.^[47] During the mid-19th and early-20th centuries there was an upsurge of industry in Croatia, strengthened by the construction of railways and the electric-power production.^[48] Industrialization was faster in central Croatia than in other regions, while Dalmatia remained one of the least developed provinces of Austria-Hungary.^[49][50] In 1918 Croatia became part of the Kingdom of Yugoslavia, which was, during the interwar period, one of the least developed countries in Europe. Most of its industry was based in Drava Banovina (Slovenia) and Banovina of Croatia, but further industrial development was modest and centered on textile mills, sawmills, brick yards and food-processing plants. The economy was still traditionally based on agriculture, with laborers accounting for more than half of Croatia's population.^[50][51] In 1941 the Independent State of Croatia (NDH), a World War II puppet state of Germany and Italy, was established in parts of Axis-occupied Yugoslavia. The economic system of NDH was based on the concept of "Croatian socialism".^[52] The main characteristic of the new system was the concept of a planned economy with high levels of state involvement in economic life.^[53] As the war progressed the government kept printing more money and its amount in circulation was rapidly increasing, resulting in high inflation rates.^[54] After the NDH was expelled from Croatia during World War II, the new Communist Party of Yugoslavia converted to a command economy on the Soviet model of rapid industrial development. By 1948 almost all domestic and foreign-owned capital had been nationalized. The industrialization plan relied on high taxation, fixed prices, war reparations, and export of food and raw materials. Forced collectivization of agriculture was initiated in 1949.^[50]

Throughout the 1950s, the Socialist Republic of Croatia experienced rapid urbanization. In 1965, its national economy decentralized which spurred growth of several sectors including a prosperous tourist industry. Following its northern neighbor, the Socialist Republic of Slovenia, Croatia had the second-highest GDP-per-capita from 1953 to 1989. It generated 41% higher GDP-per-capita than the Yugoslav average.^[55] Croatia generated 28.5% of Yugoslav GDP or $37.05billion in 1990.^[56] Croatia and Slovenia accounted for nearly half of the total Yugoslav GDP and reflected a significantly higher standard of living.^[57] In the mid-1960s, Yugoslavia lifted emigration restrictions and the number of emigrants increased rapidly. In 1971, nearly 224,722 workers from Croatia were employed abroad, mostly in West Germany.^[58][59] Foreign remittances contributed $2 billion annually to the Croatian economy by 1990.^[60] This, coupled with austerity programs and hyperinflation in the 1980s, led to discontent in both Croatia and Slovenia which eventually fueled its independence movement.^[61]

In the late 1980s and early 1990s, with the collapse of socialism and the beginning of economic transition, Croatia faced considerable economic stagnation. This included inefficient privatization, the disruption of free trade as well as a large refugee and displaced population, both Croatian and Bosnian.^[62] Shortly after Croatia gained independence in 1995, the country entered into an economic recession stemming from fallout related to the broader Yugoslavian economy. During the related Yugoslav Wars, Croatian infrastructure sustained large-scale damage in from 1991 to 1992, especially their revenue-rich tourism industry. The privatization of sovereign assets and transformation from a planned economy to a market economy was unsteady, largely as a result of public mistrust when many state-owned companies were sold to politically well-connected at below-market prices. With the end of the war, Croatia's economy recovered moderately, but lingering corruption stymied economic reforms and foreign investment.^[61][63]

The early 1990s experienced high inflation. In 1991, the Croatian dinar was introduced as a transitional currency, but inflation continued to accelerate. The anti-inflationary stabilization steps in 1993 decreased retail price inflation from a monthly rate of 38.7% to 1.4%, and by the end of the year, Croatia experienced deflation. In 1994, Croatia introduced the kuna as its currency.^[63] The central government budget was in surplus in 1997, most of which was used to repay foreign debt.^[64] Public debt-to-GDP had fallen from 27.30% to 26.20% at the end of 1998.^[63] The consumer-driven economic boom was disrupted in mid-1998, as a result of a banking crisis that saw 14 banks insolvent.^[63]

21st century

Croatia emerged out of economic recession in 1999, with growth reaccelerating in 2000 through a number of structural reforms.^[65] Economic growth in the 2000s was stimulated by a credit boom led by newly privatized banks, capital investment, especially in road construction, a rebound in tourism and credit-driven consumer spending.^[61][66] In 2003, the nation's economy would officially recover to the amount of GDP it had in 1990.^[67] Unemployment continued falling, powered by growing industrial production and expanding economic output.^[68][69] Between 2003 and 2007, Croatia's private-sector share of GDP increased from 60% to 70%.^[70] Economic growth declined due to the global 2008 financial crisis.^[71] After initially the avoiding severe economic disruption neighboring countries faced, Croatia saw a decline in GDP growth from 2009 to 2010, falling flat in 2011.^[72][73] The slow pace of privatization of state-owned businesses and sensitive tourism sector continued to drag on the economy.^[71]

Croatia joined the European Union on 1 July 2013 as the 28th member state. The Croatian economy rapidly integrated with the rest of continental EU states, becoming more sensitive to international trade. Italy, Germany and Slovenia became Croatia's most important trade partners.^[72][74] The annual average unemployment rate spiked in 2014 at 17.3%, the third-highest unemployment rate in the EU, after Greece (26.5%), and Spain (24.%).^[69] Croatia's heavily backlogged judiciary system, combined with inefficient public administration, especially regarding the issues of land ownership and corruption in the public sector remained a key challenge. Throughout 2015 to 2020, the Croatian economy continued to see positive economic growth.^[75] Excess tax receipts in 2016 enabled the repayment of debt and narrowed the current account deficit.^[76][77]

The economy was heavily impacted by the COVID-19 pandemic in 2020 which curbed its revenue-rich tourism sector. During this period, 400,000 workers filed for economic aid and the European Commission estimated an annual economic loss of 9.6%.^[78] Later that year, capital city Zagreb was struck by a major earthquake which caused severe infrastructure damage.^[79] In 2021, ahead of Croatia's ascension into the Eurozone, the nation posted record gains in exports, industrial production, and credit rating.^[80][81][82] It's debut automotive industry was formed with the advent of Rimac Automobili in Sveta Nedelja.^[83] Croatia's digital economy increased by 16% on average annually from 2019 to 2021. It was estimated that by 2030 its value could reach 15% of total GDP, with the IT sector being the main driver of that growth.^[84] Croatia joined the Eurozone and Schengen Area in 2022, with the country adopting the Euro currency in 2023.^[85][86][43]

Industry

• 
  Uljanik shipyard
• 
  Asphalt plant in Ivanovec
• 
  Sisak oil refinery
• 
  Maraska liqueur factory in Zadar

The industrial production of Croatia has historically played an important role in the country's economy.^[94] It has a longstanding tradition based since the 19th century on agriculture, forestry and mining. Many industrial branches developed at that time, like wood industry, food manufacturing, potash production, shipbuilding, leather and footwear production, textile industry, and others. It typically constitutes around 20% of overall economic output, with an average annual growth rate of 3-4%.^[94]

Tourism

• 
  Cruise ship in Dubrovnik
• 
  Plitvice Lakes National Park
• 
  St. Mark's Church in Zagreb
• 
  Varaždin Old Town
• 
  Zlatni Rat beach on the island of Brač

Tourism is a major industry and economic sector. It routinely generates 10% to 15% of total GDP.^[38][39] A total of 20.2 million tourists visited in 2024.^[95] In 2025, Croatia was the ninth-most-visited state in the EU and third-most-visted in Southern Europe.^[96] Its positive effects are felt throughout the economy in terms of increased business volume observed in retail business, processing industry orders and summer seasonal employment. The industry is considered an export business, because it significantly reduces the country's external trade imbalance.^[97] Inflation and overtourism has led to increased travel regulations and tourist costs since 2024.^[98] Eurostat estimated that nearly 55% of EU tourist accommodation is between Croatia (117,000) and neighboring Italy (230,000).^[99]

Agriculture

• 
  Boškarin cattle
• 
  Plantations in the fertile Neretva valley
• 
  Vineyards of Istria
• 
  Olive trees of Lun

Croatian agricultural sector subsists from exports of blue water fish, which in recent years experienced a tremendous surge in demand, mainly from Japan and South Korea. Croatia is a notable producer of organic foods and much of it is exported to the European Union. Croatian wines, olive oil and lavender are particularly sought after. Value of Croatia's agriculture sector is around 3.1 billion according to preliminary data released by the national statistics office.^[100] Croatia has around 1.72 million hectares of agricultural land; totally utilized land for agricultural in 2020 was around 1.506 million hectares, of these permanent pasture land constituted 536,000 hectares or some 35.5% of total land available to agriculture.^[101]

Transport

The highlight of Croatia's recent infrastructure developments is its rapidly developed motorway network, largely built in the late 1990s and especially in the 2000s. By January 2022, Croatia had completed more than 1,300 kilometres (810 miles) of motorways, connecting Zagreb to most other regions and following various European routes and four Pan-European corridors.^[102][103] The busiest motorways are the A1, connecting Zagreb to Split and the A3, passing east–west through northwest Croatia and Slavonia.^[104] A widespread network of state roads in Croatia acts as motorway feeder roads while connecting all major settlements in the country. The high quality and safety levels of the Croatian motorway network were tested and confirmed by several EuroTAP and EuroTest programs.^[105][106]

Croatia has an extensive rail network spanning 2,722 kilometres (1,691 miles), including 985 kilometres (612 miles) of electrified railways and 254 kilometres (158 miles) of double track railways. The most significant railways in Croatia are found within the Pan-European transport corridor Vb and corridor X connecting Rijeka to Budapest and Ljubljana to Belgrade, both via Zagreb.^[102] All rail services are operated by Croatian Railways.^[107]

There are international airports in Zagreb, Zadar, Split, Dubrovnik, Rijeka, Osijek and Pula.^[108] As of January 2011, Croatia complies with International Civil Aviation Organization aviation safety standards and the Federal Aviation Administration upgraded it to Category 1 rating.^[109] The busiest cargo seaport in Croatia is the Port of Rijeka and the busiest passenger ports are Split and Zadar.^[110][111] In addition to those, a large number of minor ports serve an extensive system of ferries connecting numerous islands and coastal cities in addition to ferry lines to several cities in Italy.^[112] The largest river port is Port of Vukovar, located on the Danube, representing the nation's outlet to the Pan-European corridor VII.^[102][113]

Energy

The energy sector of Croatia comprises the nation's total energy and electricity production, consumption and import. The majority of energy is generated through hydropower, with the highest quantity of water resources per capita in the European Union (30,000 m³).^[114][115] The country satisfies its domestic electricity needs largely from hydro and thermal power plants.^[115] There are 631 kilometres (392 miles) of crude oil pipelines in Croatia, connecting the JANAF oil terminal with refineries in Rijeka and Sisak, as well as several transshipment terminals. The system has a capacity of 20 million tonnes per year.^[116] The natural gas transportation system comprises 2,544 kilometres (1,581 miles) of trunk and regional natural gas pipelines, and more than 300 associated structures, connecting production rigs, the Okoli natural gas storage facility, 27 end-users and 37 distribution systems.^[117] It operates the Krško nuclear power plant alongside neighboring Slovenia in a joint venture to supply nuclear power to the region.^[118][119]

Central bank

The country's monetary policy is formulated and implemented by its national bank, based in capital city Zagreb.^[130]

• Croatian National Bank (CNB)

Stock Exchange

The only stock exchange in Croatia, the ZSE, was founded in 1991 with trading commencing a year later.^[131]

• Zagreb Stock Exchange (ZSE)

Retail banks

Retail banks constitute the broader economy's financial sector. These banks operate within the European single market and its related banking union allowing for greater cross-border banking activity.

• Zagrebačka banka (owned by UniCredit from Italy)
• Privredna banka Zagreb (owned by Intesa Sanpaolo from Italy)
• Hrvatska poštanska banka (state-owned by Government of Croatia)
• OTP Banka (owned by OTP Bank from Hungary)
• Raiffeisen Bank Austria (owned by Raiffeisen from Austria)
• Erste & Steiermärkische Bank (former Riječka Banka, owned by Erste Bank from Austria)