Croatia is a unitary democratic parliamentary republic in Europe at the crossroads of Central Europe, the Balkans, and the Mediterranean. Its capital and largest city is Zagreb. The country’s population was 4.29 million in 2011, according to statistics provided by the Croatian government. Croatia today has a comparatively very high life expectancy, literacy, education, standards of living and income equality, and it ranks high among Central European nations in terms of education, health, quality of life and economic dynamism. The International Monetary Fund classified Croatia as an emerging and developing economy, and the World Bank identified it as a high income economy. Does this mean that business in Croatia is fairing well?
The service sector dominates Croatia’s economy, followed by the industrial sector and agriculture. Tourism is a significant source of revenue during the summer, with Croatia ranked the 18th most popular tourist destination in the world. The state controls a part of the economy, with substantial government expenditure. The European Union is Croatia’s most important trading partner. Croatia has a high-income market economy and IMF data shows that the Croatian nominal GDP stood at $64.160 billion, or $14,529 per capita, at the same time in 2011. In 2010 the country has been ranked 62nd by Transparency International with a Corruption Perceptions Index of 4.1. The Croatian state still controls a significant part of the economy, with government expenditures accounting for as much as 40% of GDP, according to the US State Department. Tourism dominates the Croatian service sector and accounts for up to 20% of Croatian GDP. Annual tourist industry income for 2011 was estimated at €6.61 billion. With over 10 million foreign tourists annually, business in Croatia revolves heavily around tourism and 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.
Import and Export Markets
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. Croatia’s biggest export markets are Italy 19.1%, Bosnia and Herzegovina 12.98%, Germany 11.06%, Slovenia 7.47%, Austria 5.44%, Serbia 5.41% . Croatia’s biggest export products were transport equipment, machinery, textiles,chemicals, foodstuffs, and fuels. Its biggest import partners are Italy 15.46%, Germany 13.57%, Russia 9.29%, China 6.83%, Slovenia 5.75%, Austria 5.04%. Croatia heavily imports machinery, transport and electrical equipment; chemicals, fuels and lubricants; and foodstuffs. The country has since experienced faster economic growth and has been preparing for membership in the European Union, its most important trading partner.
Overall, business in Croatia is doing well and it’s a decent market to do business in. It’s somewhat small, but it is fairly rich. In addition, once Croatia becomes a member of the European Union, their is likely to be a dramatic expansion in international trade for Croatia. Croatia was ranked at 80th in the World Bank’s Ease of Doing Business indicator. In the same indicator, it was ranked at 133th for Protecting Investors, 100th for Trading Across Borders, and 48th for Enforcing Contracts. So clearly the rankings are not the most impressive, but Croatia is a great stepping stone into the European markets.