Economic trends
The Croatian economy is showing encouraging results. Growth in domestic demand sustains the economic dynamism, which in turn is stimulated by the recent credit boom following the privatization of banks and their acquisition by foreign capital, investments (mainly in road construction), the dynamism of the tourism sector and the profits of the SMEs. The growth rate of the GDP has been progressive: 4.7% in 2006 and 5.5% in 2007. In order to maintain the national economy, the Croatian government has re-tightened its budget. It has started privatizations and adopted policies that promote opening the country's economy to international trade.
Nevertheless, economic growth has slowed down since 2008 and especially in 2009, mainly because of low consumption in the country, the drop in domestic demand and exports. Croatia faces a high unemployment rate of around 15% of the active population. Inflation is under control, remaining under 3%. Croatia was affected by the economic crisis but to a lesser extent, compared to other European countries. The country adopted economic recovery measures at the beginning of the crisis and injected funds into the banking sector, which enabled the country to be prepared to face the effects of the crisis. Nevertheless, there was an economy slowdown in Croatia and the tourism sector, which is one of the economy's drivers, faced a decline in the number of foreign visitors.
In 2010, the country entered into recession during the first six months of the year and the GDP continued to decrease. According to financial analysts, the economic situation in Croatia will not improve much in 2011 and 2012. The country has to face several challenges: domestic and foreign financial imbalance, maladjusted fiscal policies, reduction in household consumption, rise in unemployment and a lack of investments in the key sectors.
Main branches of industry
The agricultural sector represents more than 6% of the country's GDP. Croatia mainly produces wheat, corn, sugar beet, fruits, wine and olive oil.
The Croatian industry is concentrated in competitive activities: textiles, wood, the steel industry, aluminum and the food industry. With more than one-third of the territory covered with forests, the wood industry is one of the fundamental sectors of the economy. The country has limited mineral resources. The manufacturing industry employs 90% of the total workers and experienced a reduction of 12% during the first six months of 2009. Industrial production slowed down by 10% in the first semester of 2009. This is due to a backlash of the global economic crisis which also affected Croatia.
The tourism sector is in full bloom. As a fact, Croatia receives almost 10 million visitors every year and its growth will be confirmed in the next following years with the development of even more modern infrastructures to welcome foreign tourists.
International trade
Croatia joined the WTO in 2000 and has also signed an Agreement of Association with the European Union in 2001. Its economy depends heavily on foreign trade. The foreign trade's contribution to the GDP was of 105% in 2008. Croatia's three main trade partners are Italy, Bosnia and Germany. Its three main suppliers are Italy, Germany and Russia. Croatia mainly exports mineral fuels, ships, boats, electric & mechanical machinery, equipment, wood and wooden articles. Fuels, equipment and machinery as well as vehicles are also significant import items. The most promising sectors are tourism, construction, telecommunications, and retail sales.
The Croatian trade balance is constantly in deficit and with the effects of the crisis, this deficit became deeper due to the fall in exports. The revenues related to tourism, which were also low, did help to compensate a little the global deficit.
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