Economic trends
Croatia should become the 28th member state of the EU in July 2013. In 2012, the Croatian economy, already oriented heavily towards Europe, remains nonetheless very dependent on the regional situation. Following the 2009 recession (-6% growth in 2009 and -1.2% in 2010), in 2011 its economy registered a slight increase in its GDP (0.5%).
The country had adopted measures to boost its economy ahead of the financial crisis and had injected liquidity into the domestic banking sector which was then used to better cope with the effects of the crisis. However, today, looking at the evolution of household debt (+0.6% in 2011) and business debt (+ 5.6% in 2011), there are few signs of sustainable recovery. The forecast for 2012 also suggests stagnation. The crisis has highlighted the limits of the Croatian model, based on household consumption. The key economic drivers in 2011 showed negative growth rates (Industry: -1.3%; construction: -7.3%). However, tourism revenues, which stabilized in 2010 after a decline of 6% in 2009 (EUR 6.5 billion), increased in 2011.
Croatia still needs to deal with a very high rate of unemployment, even though this rate has been decreasing (12.5% of the workforce in 2011, after 17.5% in 2010).
It seems that growth now depends on investment, on making use of the country's comparative advantages, on the rationalisation of deficitary public companites and on modernising the state administration. To face these challenges, the country will have to show a greater level of openness to direct foreign investment and work towards an improvement in the real wages/productivity ratio.
With its 4.4 milion inhabitants, whose average revenue corresponds to 65% of the EU average, as well as an influential diaspora, Croatia remains the second most developed economy of the Balkan region after Slovenia.
Main branches of industry
The agricultural sector only represents 5% of the country's GDP. Croatia mainly produces wheat, corn, sugar beet, fruits, wine and olive oil.
The secondary sector represents 22% of the GDP. 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 80% of the total workforce.
The service sector represents 73% of the GDP. 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 2005, signed the EU adhesion treatey on December 9, 2011. Its economy depends heavily on foreign trade. The foreign trade's contribution to the GDP was of more than 100% in 2011. Exports, which rose sharply in 2010 (+18%), namely in the petrochemical and marine construction sectors, dried up due to the slowdown of the eurozone economies. This fact illustrate the heavy dependency of Croatia on the economic situation of the entire continent.
Croatia's main suppliers are Italy, Germany, Russia, China, Slovenia, Austria, Hungary and France. Fuels, equipment, cars and machinery are significant import items.
Croatia mainly exports mineral fuels, ships, boats, electric & mechanical machinery, equipment, wood and wooden articles. Its main clients are Italy, Bosnia-Herzegovina, Germany, SLovenia, but also Austria, Serbia, Great Britain, the USA, Malta and France.
The Croatian trade balance is regularly 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. The most promising sectors are tourism, construction, telecommunications, and retail sales.
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Last updates: May 2012
