Economy of Croatia

By | April 29, 2022

According to cheeroutdoor, Croatia was one of the most developed republics of the SFRY. After the declaration of independence, the level of its economic development dropped sharply. GDP production fell from $24.8 billion in 1990 to $10.9 billion in 1993, and per capita from $5.2 thousand to $2.3 thousand. Inflation hit four digits. The number of unemployed increased by 100 thousand, amounting to 266.6 thousand people. The average monthly salary decreased from 435.1 US dollars in 1990 to 111.0 US dollars in 1992. In addition to the problems of the transition period, Croatia simultaneously solved the tasks of protecting the borders of the republic, liberating the “occupied” territories, creating an army, arming it, deploying and ensuring living conditions for 620 thousand Croatian refugees from the republics of the former SFRY.

Positive shifts in the economy began during the implementation of the stabilization program adopted in October 1993. On May 30, 1994, a new national currency, the kuna, was introduced. Five years later, in 1998, GDP reached 21.6 billion US dollars, and per capita – 4.8 thousand US dollars. The average monthly salary rose to $390. The country’s international currency reserves amounted to $2.8 billion. Inflation 5.4%. The implementation of a number of major projects of national importance was completed, incl. built: a factory for the production of medicines “Belupo” (Koprivnitsa), a factory for the production of seasonings and soups “Vegeta” as part of the concern “Podravka”, TPP “Plomin-2” with a capacity of 240 MW, a floating platform “Ivana-1” for extraction of natural gas from the bottom of the Adriatic Sea. A large part of the Zagreb-Rijeka motorway, which is important for Croatia, has been built. A 6-kilometer tunnel was broken through Mount Velibit, linking the north of the country with southern Dalmatia, and others. Commitments to index pensions were fulfilled. VAT was abolished on bread, milk, basic medicines and books.

In 1999, financial difficulties intensified in the country, and there was a decline in economic development. In 2000, the country entered with a new government and in the face of an urgent need to take measures to bring the country out of the recession that began in the last year of the CDU. The government came up with a program of actions based on maintaining stability at the macroeconomic level, a stable exchange rate of the national currency and low inflation rates. In general, this course was sustained.

After some economic downturn in 1999, fairly high rates of economic growth were ensured. In 2002, GDP was $22.4 billion and per capita $5,057. The exchange rate of the kuna was stable, inflation, equal to 2.2%, was one of the lowest among the countries with economies in transition. The average monthly salary in 2002 reached 3,720 kunas (473.3 US dollars) and closely approached the level of 1990. Foreign exchange reserves increased from 3.5 billion US dollars in 2000 to 5.9 billion at the beginning. 2003. Growth in retail turnover, including car service and repair, amounted to 12.8%.

The problem of unemployment remained unresolved, but in 2002 there were positive developments. The number of unemployed, as of December 31, amounted to 366.2 million people, or 7.4% less than on December 31, 2001. In July 2003, the number of unemployed decreased to 314.2 thousand. employment, in which special attention is paid to the issue of youth employment and stimulating the opening of new jobs by entrepreneurs. In 2002, 68,000 unemployed received cash unemployment benefits. Other problems are the continued growth of foreign debt, which has exceeded the stake. 2002 USD 15.3 billion (68.2% of GDP) with a further growth trend. Imports continue to grow at a faster pace than exports. The negative foreign trade balance in 2002 exceeded 1/4 of GDP and amounted to 5.8 billion US dollars. The negative current account balance is 1.54 billion US dollars, or 6.9% of GDP (3.7 in 2001).

The new government of I. Sanader proclaims the development of entrepreneurship, lowering the level of taxation, increasing employment, strengthening the social protection system, reducing state spending and increasing the importance of science and new technologies in economic development as the main tasks of its economic policy. A new strategy for the development of agriculture is proposed.

An important task in the economic development of Croatia remains the completion of privatization. By 2002, approx. 3000 enterprises. The privatization of the largest state-owned enterprises and systems, whose assets are estimated at $12.8 billion, has begun. Foreign direct investment in the Croatian economy for 1993-2002 amounted to 7.47 billion US dollars, with St. 70% has been invested in the last 4 years. The largest investors are firms from Austria, Germany, the USA, Luxembourg and Italy. More than 2/3 of all investments are made in telecommunications, banking, pharmaceutical industry, cement production and oil production.

GDP production structure (as of 2002): industry approx. 20%, agriculture 7%, construction 4.5%, transport 10%.

The dynamics of the development of industry since the end. 1980s and until 1995 is characterized by a reduction in production. By 1995, industrial output fell to 56% of the 1990 level. In the 2nd half. 1990s production began to rise. In 1998 it was already 64%, in 2000 – 73%, and in 2002 – approx. 80%. Leading industries: electric power industry, oil and gas industry, shipbuilding, electrical engineering, cement, pharmaceutical, food and woodworking, as well as the production of certain types of engineering products, chemical and textile industries. The production of soft drinks, beer and cigarettes is developed. The shipyards Ulyanik (Pula), 3 May (Rijeka) and Brodosplit (Split), the electrical engineering firms Ericsson Nikola Tesla and Koncar, the pharmaceutical company Pliva (Zagreb),

There are favorable natural and climatic conditions for the development of agriculture. Agricultural land – 3.151 million hectares, of which 2.02 million hectares are cultivated, of which 80.4% is privately owned. The average allotment of an individual farm in the country is 5.5 hectares. A policy oriented towards the creation of large private farms is being pursued. Croatia grows wheat, barley, oats, corn, sunflower, soybeans, sugar beets, potatoes, etc., as well as Mediterranean fruits (olives, figs, citrus fruits). Viticulture, animal husbandry, fishing and artificial cultivation of freshwater and sea fish and shellfish are developed. In 2002, 988.2 thousand tons of wheat, 170.9 thousand tons of barley, 2.5 million tons of corn, 129.5 thousand tons of soybeans, 1.2 million tons of sugar beet, 63 thousand tons of sunflower and 504.6 thousand tons of potatoes.

The main role in passenger and freight transportation is played by road and rail transport. In 2002, St. 65 million passengers and up to 46 million tons of cargo. The railway network (2725 km) connects all major Croatian cities, excluding Dubrovnik. 35.6 million people were transported by rail. and 11 million tons of cargo. Electrified approx. 1000 km of railway tracks. Croatia has 600 km of oil pipelines and approx. 2000 km of gas pipelines. In 2002, 6.7 million tons of oil and 2.2 million tons of natural gas were pumped. The planned connection of the Adria and Druzhba oil pipelines, participation in the construction project of the Constantia (Romania) – Trieste (Italy) oil pipeline through Croatia, as well as gasification of the entire country will further increase the role of trunk transport. International airports in Croatia are located in Zagreb, Split, Dubrovnik, Pula, Rijeka, Zadre and Osijek. The largest seaports are located in Rijeka, Ploce, Split, Zadar, Sibenik.

Tourism in Croatia has the status of a priority development industry. In 2002, Croatia received 6.94 million foreign guests, which is 2 times more than in 1999. Guests from Germany, Italy, Slovenia, the Czech Republic and Austria predominate. Foreign exchange earnings of the industry amounted to approx. $4 billion. In the future, foreign exchange earnings from tourism are expected to reach 12 billion US dollars.

The National Bank of Croatia (HNB) plays a key role in approving and implementing monetary and foreign exchange policy in the country. In 2002, the HNB discount rate is 4.5%, the Lombard loan rate is 9.5%, the required reserve rate of banks is 19%, and at least 40% of their reserves must be in the accounts of the HNB. The banking system is represented by 45 banks, 22 of which are owned by foreigners. Banking assets as of October 2003 were estimated at 182.8 billion kunas, with 90.5% of all assets owned by banks owned by foreigners.

In 2002, the foreign trade turnover (billion US dollars) of Kh. amounted to 15.6, including export 4.9, import 10.7. In the foreign economic sphere, priorities are given to Western countries, which account for 52.7% of Croatian exports and 55.9% of imports. Main foreign trade partners: Italy, Germany, Slovenia, Austria, Bosnia and Herzegovina, Russian Federation – 59.6% of Croatia’s foreign trade turnover. The commodity export structure of Croatia is dominated by products of the processing industry. Croatia exports ships, means of telecommunications, as well as electrical engineering, products of the pharmaceutical, chemical and food industries, furniture, leather goods and other goods. Imports are dominated by engineering products, vehicles, as well as energy carriers – oil, natural gas, coal. In Croatia, particular importance is attached to increasing the export potential. The optimal participation of exports in the creation of GDP is considered to be 70%. In 2002 this share was 47%.

Economy of Croatia