Croatia

Stretching from the plains of Central Europe to the Adriatic coast, Croatia boasts a diverse geography, rich cultural heritage, and dynamic history. Since gaining independence in 1991, Croatia has made significant strides in its political, economic, and social development. As a member of the European Union (joining in 2013), the Schengen Area, and the Eurozone (joining in 2023), Croatia has firmly established itself as an integral part of the European community.

Croatia’s recent economic performance has been characterized by strong growth, income convergence with the rest of the EU and improved resilience. In recent years, economic performance has remained strong, with growth consistently exceeding the European Union average. This growth has been driven largely by domestic demand. Favorable labor market conditions have supported strong private consumption while investment has benefited from abundant EU funds. The services sector, particularly tourism, plays a pivotal role, while manufacturing and agriculture remain important contributors.

Croatia’s economic growth model in recent years has been driven largely by domestic demand, whose long-term potential is nevertheless limited, given the size of the country. Encouragingly, Croatia has demonstrated strategic shifts in the right direction to develop a more productivity led growth model. The country has adopted an industrial strategy,  increased investment in research and development, and is putting more emphasis on the quality and development impact of EU funds.

The World Bank Group has been a longstanding partner, supporting Croatia’s journey toward greater prosperity, resilience, and inclusion. As Croatia looks to the future, it is focused on leveraging its human capital, increasing private sector mobilization and uptake in AI, as well as job creation to build a more innovative and equitable society for all.

Read More

Read Less

Croatia's economy has made significant strides over the last decade despite facing major challenges. Between 2003 and 2025, the country's GDP grew at an average annual rate of 2.3%, with GDP per capita rising from $8,190 to $27,112. However, growth has been uneven due to several shocks, including the 2008 global financial crisis leading to a six-year recession, two earthquakes and the COVID-19 pandemic in 2020, causing the steepest recession in Croatia's history due to its reliance on tourism. The recovery was swift, aided by EU fiscal and monetary recovery plan and EU funds.

Since joining the EU in 2013, Croatia has benefited from access to the single market, boosting exports and integrating with European partners. EU funds have supported domestic demand and investment, with expectations of continued benefits from the next Multiannual Financial Framework 2028-2034. Croatia’s economy continued to grow in the first half of 2026, but at a slower pace than in recent years. Growth in EU-funded investment and consumer spending eased, while inflation remained high and the fiscal deficit increased. The economy is expected to maintain solid growth over the medium term, although labor shortages, global uncertainty, and competitiveness challenges could weigh on the outlook.

While Croatia's economic performance is projected to remain robust, sustaining income convergence long-term is becoming more challenging to achieve. The outlook remains positive in the medium term with growth gradually moderating to 2.2% in 2026 and 2.1% in both 2027 and 2028. Domestic demand is expected to remain the main growth driver experiencing a slowing of private consumption and investments.

Expansionary fiscal policy has supported growth in recent years. This trend is gradually being reversed through consolidation to create fiscal space for future investments, particularly in digital and clean technologies. Maintaining prudent fiscal buffers will help safeguard public debt sustainability and strengthen resilience as EU funds gradually decline.

Read More

Read Less

The World Bank Group has been a partner to Croatia for over 30 years. Since its first loan in 1994 for emergency reconstruction of war-damaged infrastructure, the World Bank has supported more than 50 projects, totaling almost $5 billion, and provided knowledge and technical assistance to help strengthen institutions and support policymaking through more than 330 reports and studies. Since 1991, IFC has invested over $2 billion in Croatia working with banks, corporates, small and medium enterprises (SMEs), and other private sector actors to strengthen capital markets, scale green technologies, and support sustainable projects and innovation.

The Croatia Country Partnership Framework 2025-2030 (CPF) aims to foster sustainable and inclusive economic growth in Croatia while addressing the country’s most acute development challenges. The CPF focuses on supporting the achievement of two main outcomes: (1) increased investment and more productive jobs and (2) increased environmental resilience. Strengthening of institutions for efficiency and better service delivery is embedded across the whole program, fostering a conducive environment for private sector growth and job creation.

The World Bank currently provides knowledge, technical assistance, and financing in the areas of digital transformation and the green transition of the economy; justice service delivery; education; business environment; land administration; science and technology; post-earthquake reconstruction of key health and education facilities; social policy; long-term care; and public administration. IFC’s indicative program in Croatia is $1 billion, with a strong focus on mobilizing private capital, in sectors such as energy, infrastructure, tourism, transport, value-added manufacturing, and agribusiness. It also plans to work with financial institutions and investment platforms supporting SMEs. All these sectors are critical for driving productivity and creating jobs at scale.

Read More

Read Less

The five-year Croatia Country Partnership Framework (CPF) focuses on job creation as a driver of sustainable, resilient, and inclusive economic growth. The strategy aims to support Croatia’s efforts to boost investment, foster innovation, and enhance environmental resilience while strengthening institutions for better service delivery to businesses and citizens.

The CPF will center on supporting Croatia achieve two broad outcomes.

First, the CPF aims to help Croatia increase investment and create more productive jobs. This involves nurturing innovation, building skills for tomorrow’s economy, and creating an environment where the private sector can grow and people can thrive. To achieve this outcome, this CPF will aim to spur investment in more innovative and higher value-added sectors reliant on higher-skilled labor, through an improved business environment and services, proactive mobilization of foreign and domestic direct investment, deeper diffusion of existing technologies, and better alignment of skills and labor with market needs. Activities will focus on modernizing public service delivery, strengthening private sector innovation and scaling up innovative investment, and better aligning skills and labor market needs.

Second, the strategy embraces Croatia’s natural assets and focuses on protecting them for generations to come by strengthening Croatia’s environmental resilience and sustainability. The CPF will support the transition to a greener economy by helping to make the energy and transport sectors more sustainable, cost efficient, and accessible for both people and businesses. It will also enhance Croatia’s resilience to climate by strengthening disaster response capacities.

Aligned with national strategies, the CPF is informed by extensive diagnostics and consultations with stakeholders, including the government, private sector, civil society, think tanks, academia, media, and development partners.

Read More

Read Less