Economy of Croatia

Economy of Croatia
Rank 65th (nominal GDP) / 77th (PPP)
Currency Croatian kuna (HRK)
Fiscal year Calendar year
Trade organisations CEFTA, WTO
Statistics
GDP
$60.59 (2010 est.) current (2010 est.)
$85.59 (2010 est.) PPP billion
GDP growth -1.5% (2010 est.)
GDP per capita EUR12,630
$15,628 current
$19,980 PPP (2009 est.)[1]
GDP by sector agriculture: 6.7%; industry: 27.1%; services: 66.1% (2009 est.)
GDP by component Private consumption (52.3%)
Public consumption (18.7%)
Investments (32.8%)
Export (50.4%)
Import (54.2%) (2007)
Inflation (CPI) 1.1% (2010 est.)
Population
below poverty line		 17% (2008)
Gini index 29 (2008)
Labour force 1.769 million (November 2009 est.)
Labour force
by occupation		 agriculture: 5%; industry: 31.3%; services: 63.6% (2008)
Unemployment 13.5% (March 2011.)
Average gross salary

7,806 HRK / 1,530 $, monthly[1]

43,76 HRK / 8,00 $, per hour[2]
Average net salary

5,450 HRK / 1,070 $, monthly[1]

30,64 HRK / 5,60 $, per hour[2]
Main industries chemicals and plastics, machine tools, fabricated metal, electronics, pig iron and rolled steel products, aluminum, paper, wood products, construction materials, textiles, shipbuilding, petroleum and petroleum refining, food and beverages, tourism
Ease of Doing Business Rank 80th[3]
External
Exports $12.15 billion (2010 est.)
Export goods transport equipment, machinery, textiles, chemicals, foodstuffs, fuels
Main export partners Italy 19.1%, Bosnia and Herzegovina 12.98%, Germany 11.06%, Slovenia 7.47%, Austria 5.44%, Serbia 5.41% (2009)
Imports $20.23 billion (2010 est.)
Import goods machinery, transport and electrical equipment; chemicals, fuels and lubricants; foodstuffs
Main import partners Italy 15.46%, Germany 13.57%, Russia 9.29%, China 6.83%, Slovenia 5.75%, Austria 5.04% (2009)
FDI stock $32.13 billion (31 December 2009 est.)
Gross external debt $60.69 billion (31 December 2010 est.)
Public finances
Public debt 58% of GDP (2010 est.)
Revenues $20.99 billion (2009 est.)
Expenses $22.35 billion (2009 est.)
Economic aid EUR179.5 million (0.12% of GNI) (2007)
Credit rating BBB- (Domestic)
BBB- (Foreign)
BBB+ (T&C Assessment)
(Standard & Poor's)[4]
Foreign reserves US$16.082 billion (March 2011)[5]
Main data source: CIA World Fact Book
All values, unless otherwise stated, are in US dollars

Economy of Croatia is a service-based economy with the tertiary sector accounting for 70% of total gross domestic product (GDP). Croatian GDP in 2010 was 335.5 billion Croatian Kuna and contracted by 1.4% year-on-year. Although Croatian economy had showed signs of recovery in the last quarter of 2010 and officially exited recession in the first quarter of 2011, economic indicators suggest that the recovery may be sluggish with the economy expected to grow by 1.5-1.8% in 2011.

In spite of the rather slow post-recession recovery, in terms of income per capita Croatia is still ahead of some European Union member states such as Bulgaria, Romania, Latvia, Lithuania, and Poland.[6] Estimated GDP per capita in purchasing power parity (PPP) in 2010 was around USD 19,754 or 63.3% of the EU average for the same year.[7]

The industrial sector with exports of over €1 billion annually is dominated by shipbuilding which accounts for over 10% of exported goods. Food processing and chemical industry also account for significant portions of industrial output and exports. Industrial sector represents 27% of Croatia’s total economic output while agriculture represents 6%. Industrial sector is responsible for 25% of Croatia's GDP, with agriculture, forestry and fishing accounting for the remaining 5% of Croatian GDP.

Croatian agricultural sector subsists from exports of blue water fish, which in recent years experienced a tremendous surge in demand, mainly from Japan and South Korea. Croatia is a notable producer of organic foods and much of it is exported to the European Union. Croatian wines, olive oil and lavender are particularly sought after.

Tourism is traditionally a notable source of income, particularly during the summer months, but also more recently during the winter months as well, due to an increase in popularity of snow sports such as skiing. With over 10 million foreign tourists annually, tourism generates revenue in excess of €7 billion. Croatia is ranked among the top 20 most popular tourist destinations in the world, and was voted world's top tourism destination in 2005 by Lonely Planet.[8]

Trade plays a major role in Croatian economic output. In 2007 Croatia's exports were valued at USD 12.84 billion (24.7 billion including service exports). Croatia has a stable market economy accompanied by a strong and stable currency, the Kuna.

Croatia and Slovenia, the two westernmost republics in what was formerly SFR Yugoslavia, accounted for nearly half of the total Yugoslav GDP, and this was reflected in the overall standard of living which in Croatia's case was more than 50% above Yugoslav average, and close to 90% in Slovenia. Nevertheless, since the late 1980s and the beginning of economic transition, Croatian economy experienced difficulties due to de-industrialization, war destruction and the loss of Yugoslav and Comecon markets.

Persistent economic problems still remain and include a rather high unemployment rate (9.6% in 2007),[9] and the slow progress of necessary economic reforms. Of particular concern is the heavily backlogged judiciary system, combined with inefficient public administration, especially regarding the issues of land ownership and corruption in the public sector. Unemployment is regionally uneven: it is very high in eastern and southern parts of the country, nearing 20% in some areas, while relatively low in the north-west and in larger cities, where it is between 3 and 7%. Unemployment has been constantly declining by 5% over the last 7 years.[10]

The country has since experienced faster economic growth and has been preparing for membership in the European Union, its most important trading partner.

In February 2005, the Stabilization and Association Agreement with the European Union officially came into force, and Croatia is advancing towards full EU membership. The country expects serious positive economic impulses and high growth rates in the coming years, as currently its economic development is marred by a high export deficit and a high but manageable debt. Croatia is expecting a major boom in investments, especially greenfield investments.

Contents

Gross Domestic Product

GDP per Country: (source IMF/World Bank - 1990)

Note: Statistics in this table are from 1990. Croatian GDP per capita grew by almost 300% between 1990 and 2008.

Republic Economy
Republic Number of citizens GDP/Million of USD GDP/USD per capita
1 Slovenia 1,982,000 13,740 6 940
2 Croatia 4,784,000 25,640 5 350
3 Serbia 9,534,000 27,930 2,930
- Vojvodina 1,996,000 7,660 3,380
- Central Serbia 5,582,000 16,910 3,030
- Kosovo 1,956,000 3,360 1,770
4 Bosnia and Herzegovina 4,364 000 10,870 2 490
5 Montenegro 652,000 1,520 2 330
6 Macedonia 2,021,000 4,420 2 180
Total Yugoslavia 23 451 000 84,120 3 587

Fiscal year: calendar year GDP per county: (source Croatian statistical institute for year 2005)

Rank County Number of citizens GDP (millions of euros) GDP/euros per capita
1 Zagreb 779,145 10,070 12,908
2 Istria County 205,825 1,884 9,126
3 Primorje-Gorski Kotar County 306,159 2,547 8,337
4 Lika-Senj County 53,006 378 7,136
5 Varaždin County 185,756 1,261 6,787
6 Koprivnica-Krizevci County 125,352 845 6,744
7 Dubrovnik-Neretva County 123,047 785 6,382
8 Zadar County 160,506 945 5,887
9 Medjimurje County 120,790 684 5,662
10 Sisak-Moslavina County 182,615 1,001 5,478
11 Karlovac County 142,313 777 5,460
12 Split-Dalmatia County 459,818 2,472 5,374
13 Zagreb County 309,369 1,640 5,294
14 Bjelovar-Bilogora County 133,198 704 5,285
15 Osijek-Baranja County 329,465 1,736 5,260
16 Krapina-Zagorje County 143,465 732 5,101
17 Pozega-Slavonia County 84,897 411 4,835
18 Virovitica-Podravina County 93,952 451 4,803
19 Sibenik-Knin County 114,344 498 4,368
20 Vukovar-Srijem County 195,771 788 4,028
21 Brod-Posavina County 177,558 654 3,785
Total Croatia 4,442,000 31,263 7,038

GDP per county: (source Croatian statistical institute for year 2006)

Rank County Number of citizens GDP (millions of euros) GDP/euros per capita
1 Zagreb 779,145 10,924 14,005
2 Istria County 205,825 2,070 10,048
3 Primorje-Gorski Kotar County 306,159 2,787 9,107
4 Lika-Senj County 53,006 410 7,735
5 Varaždin County 185,756 1,401 7,540
6 Koprivnica-Križevci County 125,352 945 7,535
7 Dubrovnik-Neretva County 123,047 880 7,154
8 Zadar County 160,506 1,052 6,554
9 Medjimurje County 120,790 758 6,275
10 Sisak-Moslavina County 182,615 1,084 5,927
11 Karlovac County 142,313 840 5,903
12 Bjelovar-Bilogora County 133,198 780 5,855
13 Split-Dalmatia County 459,818 2,649 5,758
14 Zagreb County 309,369 1,800 5,806
15 Osijek-Baranja County 329,465 1,900 5,757
16 Krapina-Zagorje County 143,465 802 5,588
17 Pozega-Slavonia County 84,897 462 5,435
18 Virovitica-Podravina County 93,952 506 5,382
19 Sibenik-Knin County 114,344 570 5,000
20 Vukovar-Srijem County 195,771 872 4,455
21 Brod-Posavina County 177,558 728 4,097
Total Croatia 4,440,000 34,220 7,707

GDP per county: (GDP for year 2007 - source Croatian National Bank)

Rank County Number of citizens GDP (millions of euros) GDP/euros per capita
1 Zagreb 779,145 11,812 15,140
2 Istria County 205,825 2,254 10,942
3 Primorje-Gorski Kotar County 306,159 3,124 10,210
4 Lika-Senj County 53,006 466 8,790
5 Varaždin County 185,756 1,577 8,480
6 Koprivnica-Krizevci County 125,352 1,045 8,310
7 Dubrovnik-Neretva County 123,047 974 7,920
8 Zadar County 160,506 1,184 7,375
9 Medjimurje County 120,790 848 7,020
10 Zagreb County 309,369 2,018 6,520
11 Karlovac County 142,313 915 6,447
12 Sisak-Moslavina County 182,615 1,170 6,397
13 Bjelovar-Bilogora County 133,198 843 6,338
14 Split-Dalmatia County 459,818 2,915 6,336
15 Osijek-Baranja County 329,465 2,066 6,275
16 Krapina-Zagorje County 143,465 884 6,155
17 Virovitica-Podravina County 93,952 562 5,978
18 Pozega-Slavonia County 84,897 502 5,906
19 Sibenik-Knin County 114,344 642 5,600
20 Vukovar-Srijem County 195,771 924 4,720
21 Brod-Posavina County 177,558 772 4,340
Total Croatia 4 440 000 37,497 8,450

GDP per county: (Preliminary GDP Data for year 2008 - source Croatian National Bank, first time grey market included)

Rank County Number of citizens GDP (millions of euros) GDP/euros per capita
1 Zagreb 779,145 15,035 19,270
2 Istria County 205,825 2,882 14,050
3 Primorje-Gorski Kotar County 306,159 3,970 12,975
4 Lika-Senj County 53,006 644 12,145
5 Varaždin County 185,756 2,052 11,095
6 Koprivnica-Krizevci County 125,352 1,365 10,915
7 Dubrovnik-Neretva County 123,047 1,287 10,475
8 Zadar County 160,506 1,552 9,700
9 Medjimurje County 120,790 1,118 9,315
10 Karlovac County 142,313 1,201 8,465
11 Sisak-Moslavina County 182,615 1,535 8,435
12 Bjelovar-Bilogora County 133,198 1,121 8,430
13 Krapina-Zagorje County 143,465 1,194 8,355
14 Zagreb County 309,369 2,545 8,230
15 Split-Dalmatia County 459,818 3,745 8,145
16 Osijek-Baranja County 329,465 2,670 8,110
17 Virovitica-Podravina County 93,952 757 8,060
18 Pozega-Slavonia County 84,897 683 8,040
19 Sibenik-Knin County 114,344 867 7,605
20 Brod-Posavina County 177,558 1,107 6,250
21 Vukovar-Srijem County 195,771 1,172 6,010
Total Croatia 4,440,000 48,502 10,890

History

Pre-1990

In an economy traditionally based on agriculture and raising of livestock, peasants accounted for more than half of Croatia's population until after World War II. Pre-1945 industrialization was slow and centered on textile mills, sawmills, brick yards and food-processing plants.

Rapid industrialization and diversification occurred after World War II. Decentralization came in 1965 and spurred growth of several sectors including the prosperous tourist industry. Profits gained through Croatia's industry were used to develop poor regions in other parts of former Yugoslavia, leading to Croatia contributing much more to the federal Yugoslav economy than it gained in return. This, coupled with austerity programs and hyperinflation in the 1980s, led to discontent in both Croatia and Slovenia which eventually fuelled political movements calling for independence. Foreign remittances contributed $2 billion annually to the economy by 1990.[11]

Before the dissolution of Yugoslavia in 1991, SR Croatia was the second most prosperous and industrialized area (after SR Slovenia), with a per capita output more than one-third above Yugoslav average. Privatization under the new Croatian government had barely begun when war broke out in 1991. Economic infrastructure was directly affected by the Croatian War of Independence and sustained massive damage, particularly in 1991 and 1992.

The Tuđman years

By the end of the 1990s, Croatia faced considerable economic problems stemming from:

Croatia, along with the remainder of the former Yugoslavia, experienced a serious depression. President Franjo Tuđman initiated the process of privatization and de-nationalization in Croatia; however, it was far from transparent. The new government's inefficient and slow legal system, combined with the wider context of the Yugoslav wars, led to numerous cases of mishandled privatization efforts, collectively known as the Croatian privatization controversy. Nepotism was endemic, with the president devising a concept of "200 families" which would control all property in Croatia,[12] and during this period many influential individuals with the backing of the authorities acquired state-owned property and companies at extremely low prices, afterwards selling them off piecemeal to the highest bidder for much larger sums. This, along with the sudden loss of access to former Yugoslav markets, led to mass bankruptcies, and swelled the ranks of the unemployed by thousands, a problem Croatia still struggles with to this day. Miroslav Kutle was one of the leading businessmen in these endeavours, and he was subsequently incarcerated on multiple counts of embezzlement.

This was all helped by the inadequacy of legal restrictions in place and by the apparently active support of Croatia's authorities, which were ultimately controlled by President Tuđman. In the end this shed an increasingly negative light, and cast a shadow on his notable successes as a strategist and wartime statesman. Excluding the mostly rural rebel-occupied areas in the self-proclaimed Republic of Serbian Krajina, in the last two years of Tuđman's first presidential term the detrimental effects of uncontrolled capitalism had become strikingly visible, with more than 400,000 unemployed and a significant drop in GDP per capita, problems that Croatia struggles with to this day.

Inflation and unemployment rose sharply and the kuna fell, prompting the national bank to tighten its fiscal policy. A new banking law passed in December 1998 gave the central bank more control over Croatia's 53 commercial banks and Croatia became dependent on international debt to finance its deficit.

Despite the successful value-added tax program, planned privatization of state controlled businesses, and a revised budget with a 7% cut in spending across that board, the government still projected a $200 million deficit for 1999.

Western aid and investment, especially in the tourist and oil industries, is a significant factor in the further development of the economy. The government has been successful in some reform efforts — partially macroeconomic stabilization policies — and it has normalized relations with its creditors.

In 1998 the government founded The Business Innovation Center of Croatia – BICRO, in order to implement technology development and innovation support programs, as an important paradigm of future development.

The recession that began at the end of 1998 continued through most of 1999, and GDP in 1999 was flat. Inflation remained in check and the kuna was stable. However, consumer demand was weak and industrial production decreased. Structural reform lagged and problems of payment arrears and a lack of banking supervision continued.

Due to the upcoming elections, the ruling HDZ government promised two salary increases to public-sector employees before the end of the year which further increased the fiscal deficit.

After Tuđman

The death of President Tuđman in December 1999 and the defeat of his Croatian Democratic Union (HDZ) in the January 2000 elections ushered in a new government committed to economic reform and halting the economic decline.

The new government led by Ivica Račan carried out a large number of structural reforms. With tourism as the main contributing factor the country emerged from recession in 2000. Due to overall increase in stability, the economic rating of the country improved and interest rates dropped. As a result of coalition politics and resistance from the unions and the public, many reforms are still overdue, especially in the legal system.

Unemployment reached a peak of around 22% in late 2002 due to many overdue bankruptcies. It has since been steadily declining, powered by growing industrial production and rising GDP, rather than only seasonal changes from tourism. GDP rose to the level it had in 1990 only in 2003.

Most economic indicators remained positive in this period, except for the external debt. The Croatian National Bank had to take steps to curb further growth of indebtedness of local banks with foreign banks. The dollar debt figure is quite adversely affected by the EUR/USD ratio — over a third of the increase in debt since 2002 is due to currency value changes.

Tourism is a notable source of income during the summer. With over 10 million foreign tourists a year (as of 2006), Croatia is ranked as the 18th major tourist destination in the world.[13]

The Croatian economy is heavily interdependent on other principal economies of Europe, and any negative trends in these larger EU economies also have a negative impact on Croatia as they are its biggest trade partners. The country is a candidate for membership in the European Union. During the accession, it is expected that agricultural policy will be the biggest stumbling block, as with other recent applicant countries.

By early 2005, the foreign debt of the Government declined in growth, and was surpassed in size by the foreign debt of the banking sector, prompting further interventions by the central bank. As of late 2007, the unemployment rate is 9.6%.[9]

Stock exchanges

Banking

List of banks in Croatia

Central bank:

Major commercial banks:

Central Budget

Overall Budget:[14]
revenues:

expenditures:

Expenditure for 2007:

Expenditure for 2008 = projected:

Economic indicators

From the CIA World Factbook 2007.

GDP: purchasing power parity - $68.98 billion (2007 est.)

GDP - real growth rate: 5.8% (2007 est.)

GDP - per capita: purchasing power parity - $15,500 (2007 est.)

GDP - composition by sector: agriculture: 7.2% industry: 31.6% services: 61.2% (2007 est.)

Labor force: 1.749 million (2007 est.)

Labor force - by occupation: agriculture 2.7%, industry 32.8%, services 64.5% (2004)

Unemployment rate: 9.6% (2005 est.)[9]

Population below poverty line:
national absolute: 11% (2003)
internationally comparable: 4.8% (2003 est.)

Household income or consumption by percentage share:
lowest 10%: 3.4%
highest 10%: 24.5% (2003 est.)

Distribution of family income - Gini index: 29 (2001)

Inflation rate (consumer prices): 2.9% (2007)

Investment (gross fixed): 30.9% of GDP (2007 est.)

Budget:
revenues: $19.2 billion (104.5 billion Kuna)2007 (official figure) projected for 2008 - 115.2 billion Kuna (21.95 billion USD)
expenditures: $19.75 billion, (108.6 billion Kuna) 2007(official figure) projected 3doe 2008 - 120.5 billion Kuna (22.9 billion USD)

Public debt: 47.3% of GDP (2007 est.)

Agriculture - products: wheat, corn, sugar beets, sunflower seed, barley, alfalfa, clover, olives, citrus, grapes, soybeans, potatoes; livestock, dairy products

Industries: chemicals and plastics, machine tools, fabricated metal, electronics, pig iron and rolled steel products, aluminium, paper, wood products, construction materials, textiles, shipbuilding, petroleum and petroleum refining, food and beverages; tourism

Industrial production growth rate: 5.2% (2007 est.)

Electricity - production: 11.99 billion kWh (2005)

Electricity - production by source:
fossil fuel: 33.6%
hydro: 66%
nuclear: 0%
other: 0.4% (2001)

Electricity - consumption: 14.97 billion kW·h (2005)

Electricity - exports: 3.634 billion kW·h (2005)

Electricity - imports: 8.746 billion kW·h (2005)

Oil - production: 27,190 barrels per day (4,323 m3/d) (2005 est.)

Oil - consumption: 99,000 barrels per day (15,700 m3/d) (2004 est.)

Oil - proved reserves: 69.14 million barrels (10.992×10^6 m3) (1 January 2006)

Natural gas - production: 1.477 billion cubic metres (2005 est.)

Natural gas - consumption: 2.58 billion cubic metres (2005 est.)

Natural gas - exports: 0 cubic metres (2005 est.)

Natural gas - imports: 1.103 billion cubic metres (2005 est.)

Natural gas - proved reserves: 27.16 billion cubic metres (1 January 2006)

Current account balance: −$4.385 billion (2007 est.)

Exports: $12.02 billion f.o.b. (2007 est.)

Exports - commodities: transport equipment, textiles, chemicals, foodstuffs, fuels

Exports - partners: Italy 23.1%, Bosnia and Herzegovina 12.7%, Germany 10.4%, Slovenia 8.3%, Austria 6.1%, (2006)

Imports: $26.54 billion f.o.b. (2007 est.)

Imports - commodities: machinery, transport and electrical equipment, chemicals, fuels and lubricants, foodstuffs

Imports - partners: Italy 16.7%, Germany 14.5%, Russia 9.7%, Slovenia 6.8%, Austria 5.4%, China 5.3%, (2006)

Reserves of foreign exchange and gold: $13.67 billion (31 December 2007 est.)

Debt - external: $45.29 billion (30 June 2007 est.)

Economic aid - recipient: ODA $125.4 million (2005)

Currency: kuna (HRK)

Exchange rates: kuna per US$1 – 5.3735 (2007), 5.8625 (2006), 5.9473 (2005), 6.0358 (2004), 6.7035 (2003), 7.8687 (2002), 8.34 (2001), 8.2766 (2000), 7.112 (1999), 6.362 (1998), 6.157 (1997), 5.434 (1996), 5.230 (1995)

See also

References

  1. ^ a b Average Net Earnings from Croatian Bureau of Statistics December 2010 data, ex. rate 5,47 Croatian National Bank
  2. ^ a b Average net hourly wage for June HRK 30.64
  3. ^ "Doing Business in Croatia 2012". World Bank. http://www.doingbusiness.org/data/exploreeconomies/croatia/. Retrieved 2011-11-21. 
  4. ^ "Sovereigns rating list". Standard & Poor's. http://www.standardandpoors.com/ratings/sovereigns/ratings-list/en/eu/?subSectorCode=39. Retrieved 26 May 2011. 
  5. ^ "International Reserves and Foreign Currency Liquidity - CROATIA". International Monetary Fund. 6 May 2011. http://www.imf.org/external/np/sta/ir/IRProcessWeb/data/hrv/eng/curhrv.htm. Retrieved 31 May 2011. 
  6. ^ Per capita GDP
  7. ^ Croatian economy
  8. ^ Top Destinations for 2005
  9. ^ a b c Ekonomski Indikatori
  10. ^ stat inf 78 do 117.cdr
  11. ^ Europa Publications Limited. Eastern Europe and the Commonwealth of Independent States 1999: 1999. Routledge, 1999. (pg. 279)
  12. ^ Berislav Jelinić (2009-08-03). "Ivić Pašalić tajni ortak Hypo banke" (in Croatian). Nacional. http://www.nacional.hr/clanak/63969/ivic-pasalic-tajni-ortak-hypo-banke. Retrieved 2010-11-29. "Polovinom 90-ih Tuđman je odobrio projekt Ivića Pašalića baziran na Tuđmanovoj ideji o 200 obitelji koje bi vladale hrvatskom imovinom" 
  13. ^ untitled
  14. ^ Ministarstvo financija Republike Hrvatske - Državni proračun

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