Croatia is a small country located in Eastern Europe, on the Adriatic Sea. It has a population of approximately 4.2 million people and its economy is primarily driven by tourism, agriculture, industry, and services. The country’s GDP per capita was estimated to be around $19,900 in 2019 which is lower than the European Union average.
According to cheeroutdoor, tourism is one of the most important components of Croatia’s economy and accounts for more than 20% of its GDP. Croatia has thousands of kilometers of coastline along the Adriatic Sea which attracts millions of tourists from around the world each year to visit its beaches and islands. In addition, there are many historical sites across Croatia that draw visitors as well such as Diocletian’s Palace in Split or Stari Grad Plain on Hvar Island which are both UNESCO World Heritage Sites.
Agriculture is another important sector in Croatian economy with more than half a million people employed in this sector. The main crops grown are wheat, corn, potatoes and vegetables while other products such as olives and grapes are also produced for export. Livestock farming is also an important part of Croatia’s agricultural industry with cattle being the most common type followed by pigs and sheep among others.
Industry also plays a significant role in Croatia’s economy with manufacturing accounting for around 16% of GDP while mining makes up just 2%. Shipbuilding has long been an important industry in Croatia due to its proximity to the Adriatic Sea while oil refining is another key sector with two major refineries located on the coast near Rijeka and Sisak respectively. Other industries include textiles, pharmaceuticals, chemicals, electronics and food processing among others.
Finally, services make up around 54% of Croatian GDP with financial services being one of the most important components followed by telecommunications and retail trade among others. The government provides various incentives such as tax breaks for companies operating within special economic zones or subsidies for research & development projects which helps attract businesses into these sectors thus supporting economic growth overall.
Until World War II, agriculture was the most important industry in Croatia. In the 1960s and 1970s, there was a strong expansion of the industrial sector. Prior to the dissolution of Yugoslavia in 1991, Croatia was the most prosperous and strongest industrialized part of Yugoslavia.
Croatia’s business sector was hit hard after the war in 1991 and the three-year-long unresolved situation of regular military clashes. This was especially true of the tourism industry, which was well developed and very important for the country.
Abbreviated as HRV by abbreviationfinder.org, Croatia joined the World Trade Organization (WTO) in 2000 and the EU on July 1, 2013. A comprehensive economic reform program has contributed to economic growth and development. The Croatian economy is open, and this has resulted in a number of foreign investments and ownership in energy, real estate, banking, finance and transport.
Between 2000 and 2007, the country’s gross domestic product (GDP) increased by between four and six percent annually, but the economy weakened as a result of the financial crisis in 2008-2009. Since 2014 there has been a steady growth in GDP, thanks in part to the tourism industry. In 2017, GDP increased by 2.8 percent. Per capita GDP in 2018 was USD 24,700 against USD 22,800 in 2015. Unemployment is 12.4 percent (2017). In 2017, inflation was 1.1 percent.
The importance of agriculture to Croatia’s economy has dropped significantly since World War II. The war in the early 1990s destroyed much of Croatia’s cultivable land. The agricultural area now accounts for 23.7 percent of the country’s total area. 1.9 percent of the working population is employed in agriculture, which contributes to 3.7 per cent of the country’s GDP (2017). Maize, wheat, barley, potatoes, sugar beets and vegetables are mainly grown, along the coast also fruits. On the basis of grape cultivation, wine is produced in large parts of the country. Animal husbandry is considerable, with the breeding of cattle, pigs and poultry.
34.4 percent of Croatia is covered by forests, and forestry is an important industry. The forest areas, which are mainly state-owned, have created the basis for, among other things, the paper and furniture industry. Croatian oak, which is used for furniture production, is in demand in the world market.
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The fisheries contribution to GDP is about one percent (2017). According to Eurostat, Croatia has 7553 fishing boats operating in the Adriatic, where catches of mackerel and sardines are of the greatest importance. Along the coast there are 373 fish farming facilities. The main fishing ports are Zadar, Split, Biograd, Pula, Rijeka and Šibenik. The total catch of sea fish amounts to 69,476 tonnes (as of December 31, 2017). On the mainland, commercial fishing is mainly limited to the Danube and the lower part of Sava. In lakes there are 47 fish farming facilities for trout and carp. Fish farming on the mainland amounts to 4832 tonnes (2015).
Croatia’s coal production (lignite) at Raša on the eastern side of the Istra peninsula began in 1785. The coal mine is now closed. Croatia has a coal plant at Plomin on Istra, which is based on coal imports. The most important oil and natural gas fields are southeast of Zagreb, along the border with Hungary and in the Adriatic.
About 60 percent of the country’s electricity production is hydroelectric, while about 35 percent of its production is based on fossil fuels (oil, natural gas and coal). There are 25 hydropower plants in Croatia with a total output of around 2 GW.
In former Yugoslavia, Croatia and Slovenia were the most industrialized republics. It is estimated that around 30 per cent of Croatia’s industrial production facilities were lost due to the war in the early 1990s.
Croatia’s industrial activities now include shipbuilding (Rijeka, Split, Pula), the aluminum industry (Lozavac, Ražine), the iron and steel industry (Sisak), the chemical industry (Rijeka, Split, Šibenik), the textile industry (Zagreb, Karlovac), and not least an extensive mechanical and electrical engineering industry in the capital Zagreb.
27.3 percent of the working population is employed in manufacturing, which contributes 26.2 percent to the country’s GDP (2017).
In 2017, Croatia had exports of USD 13.15 billion, while imports were USD 22.34 billion. With this in 2017, the country had a trade deficit of just over USD 9 billion.
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The main export goods are transport equipment, textiles, chemicals and food. The five most important export markets are Italy (13.4 percent), Germany (12.2 percent), Slovenia (10.6 percent), Bosnia and Herzegovina (9.8 percent) and Austria (6.2 percent). The main import products are machinery, transport equipment, various factory-produced goods and mineral fuels. The five main markets for Croatia’s imports are Germany (15.7 percent), Italy (12.9 percent), Slovenia (10.7 percent), Hungary and Austria (both 7.5 per cent).
Transport and Communications
The rail and road networks are relatively well developed. The 2726 km railway network is the closest in the northern parts of the country. The total road network is 28 788 km, including 1146 km of motorway.
There are 69 airports in Croatia. Zagreb airport in Velika Gorica is the country’s largest airport. The main port cities are Rijeka, Zadar, Split, Šibenik and Ploče. The main river port is in Vukovar. In Croatia there are a total of 785 km of waterways.
In the former Yugoslavia, about 80 percent of tourism was linked to the coastal areas of the Adriatic, ie the areas which, after the division of the country, mostly belong to Croatia. In 1989, 8.9 million foreign tourists visited Yugoslavia, but the war at the beginning of the 1990s significantly reduced the figure.
Note: the capital city of Croatia is Zagreb with a population of 791,000 (2011 census). Other major cities include Split with a population of 178,000, Rijeka with a population of 129,000 , Osijek with a population of 108,000 (2011 census).
From 2000, there has been a sharp increase in the number of tourists to the country, and Croatia has restored its status as a popular tourist destination. The number of foreign tourists increased from 5.8 million in 2000 to 15.6 million in 2017. The largest number of tourists is from Germany, Austria, Slovenia, Italy and Poland. In particular, tourism to the islands in the Adriatic has increased.
Health tourism is also significant. There are a number of health centers with mineral and hot springs both inland and along the coast, including Daruvar, Lipik, Umag, Opatija, Hvar and Makarska. A popular destination is the Plitvice Lakes in the Plitvice National Park, where there is also skiing in the winter.