BRUSSELS – The European Commission’s autumn economic forecasts released on Friday indicate that the Croatian economy is set for strong growth of 3.6 percent this year, largely driven by robust household spending and investment.
Croatia is at the forefront of the European Union in terms of growth rate, sharing the spotlight with Cyprus, which is also expected to grow by 3.6 percent. Malta leads with a predicted growth of 5 percent.
In the coming years, the Croatian economy is projected to expand by 3.3 percent in 2025 and by 2.9 percent in 2026.
These estimates represent a considerable improvement from the spring forecasts, which had predicted a growth of 3.3 percent for this year and 2.9 percent for the next.
Croatia’s economic growth is significantly outstripping the averages for the EU and the eurozone.
The Commission anticipates that after a stagnation period, the EU economy will experience modest growth of 0.9 percent this year, with the eurozone at 0.8 percent. Next year, growth is expected to rise to 1.5 percent in the EU and 1.3 percent in the euro area, eventually reaching 1.8 percent in the EU and 1.6 percent in the eurozone by 2026.
Consumption as the Key Growth Driver
The Commission credits Croatia’s vigorous growth to private consumption, which is supported by increasing real wages and employment rates, along with sustainable investment approaches.
Government expenditures are anticipated to grow, primarily due to a comprehensive overhaul of public sector salaries, resulting in significant pay increases across various institutions and sectors, including a notable one-time salary boost.
Investment activities are likely to stay strong, supported by an uptick in spending associated with the Recovery and Resilience Mechanism, as well as enhanced fund releases under the Multiannual Financial Framework for 2021-2027, expected to begin on November 15, 2024.
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