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Economy and Finance

Economic forecast for Croatia

The latest macroeconomic forecast for Croatia. 

Indicators 2023 2024 2025
GDP growth (%. yoy) 2.6 2.6 2.8
Inflation (%. yoy) 8.4 2.5 2.0

Croatia’s GDP growth is estimated to have remained robust in 2023, at 2.6%, unchanged compared to the Autumn 2023 Forecast. Economic activity was supported by domestic demand. Private consumption benefited from favourable wage developments and strong consumer sentiment, while monthly retail trade data point to an acceleration in the fourth quarter. Strong investment growth was supported by EU funds, including those under the 2014-20 multiannual financial framework, which had to be absorbed by the end of 2023. While exports of goods declined last year due to weak external demand, overall (net) trade contributed positively to growth amid strong services exports (mainly tourism) following the euro adoption and accession to the Schengen area at the beginning of 2023.

In 2024, real GDP is forecast to also grow by 2.6%, mainly on account of strong domestic demand, and reflecting significant carry-over effects. This is marginally above the Autumn Forecast. Household consumption growth is set to accelerate as inflation abates and employment and real wages continue to increase. Significant support to wage growth is expected from the government sector, where considerable (one-off) increases are envisaged from the public sector wage-setting reform. Investment and public consumption growth are forecast to decelerate, but remain solid, also in light of the continued implementation of the Recovery and Resilience Plan and the expected easing of financing conditions. After reaching comparatively high levels, growth of services exports is forecast to slow down, while exports of goods are projected to grow again with the progressive recovery of external demand. Due to higher imports growth, net exports are however expected to provide a small negative contribution to GDP growth. In 2025, GDP growth is forecast at 2.8%, unchanged from autumn, and set to remain broad-based. Some rebalancing is expected, with the positive contribution of domestic demand likely to decline, and foreign trade adding to growth amid further strengthening of exports.

HICP inflation declined to 8.4% in 2023, from 10.7% in 2022, while inflation excluding energy and food was 8.8%. Both exceeded the corresponding euro area rates of 5.4% and 5%, respectively. The deceleration of HICP inflation over 2023 was mainly driven by energy and processed food prices. Services inflation proved to be more persistent, with a considerable contribution coming from services related to tourism, largely reflecting foreign demand. HICP inflation is forecast at 2.5% and 2% in 2024 and 2025, with the prices of energy and unprocessed food expected to drive the downward trend, while services inflation is projected to remain stickier. Compared to autumn, this is broadly unchanged for 2024 but revised up for 2025. There is a risk of a slower-than-expected decline in inflation due to wage cost pressures, especially if these are not absorbed by firm profits.