The business environment in Croatia is very favourable for investors. Excellent geographical location enables access to the market of 650 million people and labour force in Croatian is effective, motivated and innovative which is recognized by many foreign companies already operating in Croatia.
Croatia is a small but complex market. Its geography divides it into two distinct markets – the more affluent and tourism-oriented coastal region along the Adriatic Sea, and the rural inland region, dominated by agricultural and industrial activities.
The country’s population of roughly 4.2 million is largely homogenous in ethnicity, language and religion; but in the summer months, its numbers are doubled by tourists from throughout Europe and the world, making it a cosmopolitan market for products and services. Its ports and transportation infrastructure make Croatia a natural trade gateway into southeast Europe, but its largest trading partners are Italy, Germany, Slovenia and Austria.
Croatia entered the European Union (EU) on July 1, 2013, as the 28th member state. The government has been striving to raise Croatia’s competitiveness to compete in the large EU market and maximize the opportunities that membership brings, especially the absorption of a large amount of EU Structural Funds.
Before the global financial crisis of 2008-09, the Croatian economy grew at a healthy 4-5% annually, incomes doubled, and economic and social opportunities dramatically improved. However, after the financial crisis hit, back in 2008, Croatia’s economy contracted for six consecutive years, with the pace of the recession starting to weaken in 2014.
In 2015, Croatia’s recession finally came to an end, with real GDP growth reaching 1.6% in 2015 and 3.2% in 2016. Economic activity lost some steam at the end of 2017, with real GDP growth reaching 2.8%, weighing on the still positive growth outlook for 2018 and 2019 which should end up at 2.7%.
A pickup in investment is set to support the pace of growth, while private consumption remains robust. Strong employment growth helps to keep the unemployment rate on a fast-declining path resulting in an unemployment rate below 10% in 2018. The general government headline balance is projected to remain in surplus, leading to further reductions in the debt ratio.
Transport in Croatia relies on several main modes, including transport by road, rail, water and air. Road transport incorporates a comprehensive network of state, county and local routes augmented by a network of highways for long-distance travelling. Water transport can be divided into sea, based on the ports of Rijeka, Plo?e, Split and Zadar, and river transport, based on Sava and Danube. Croatia has 68 airports, nine of which are international. The country also has several airlines, of which the most notable is Croatia Airlines. Rail transport is fairly developed, with dual track and electrification not very common, although high-speed tilting trains are used on some routes. However, the bus still tends to be more common than rail as a mode of inter-city transport.