Croatia

The lands that today comprise Croatia were part of the Austro-Hungarian Empire until the close of World War I. In 1918, the Croats, Serbs, and Slovenes formed a kingdom known after 1929 as Yugoslavia. Following World War II, Yugoslavia became a federal independent Communist state under the strong hand of Marshal TITO. Although Croatia declared its independence from Yugoslavia in 1991, it took four years of sporadic, but often bitter, fighting before occupying Serb armies were mostly cleared from Croatian lands. Under UN supervision, the last Serb-held enclave in eastern Slavonia was returned to Croatia in 1998.

Main Airports

Dubrovnik (DBV), Split (SPU), Zagreb (ZAG) (Pleso International)

U.S. Embassy

Ul. Thomasa Jeffersona 2, 10010 Zagreb
tel.: [385] (1) 661-2200

Statistics

GDP: purchasing power parity:

$55.76 billion (2005 est.)

GDP - real growth rate:

4% (2005 est.)

GDP - per capita: purchasing power parity:

11,600 (2005 est.)

Inflation rate (consumer prices):

3.3% (2005 est.)

Labor force:

1.71 million (2005 est.)

Exports:

$10.3 billion f.o.b. (2005 est.)

Exports - partners:

Italy 21.8%, Bosnia and Herzegovina 14.7%, Germany 10.7%, Slovenia 8.1%, Austria 7.3% (2005)

Imports:

$18.93 billion f.o.b. (2005 est.)

Imports - partners:

Italy 15.9%, Germany 14.9%, Russia 9.1%, Slovenia 6.8%, Austria 5.8%, China 4.7%, France 4.2% (2005)

Population:

4,494,749 (July 2006 est.)

Population growth rate:

-0.03% (2006 est.)

Population Below Poverty Line:

11% (2003)

Major 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

Employing Workers: 130*

Registering Property: 109*

Enforcing Contracts: 28*

Closing a Business: 80*

*2006 World Bank rank out of 175 countries

Starting a Business

The table below shows the number of steps and the amount of time needed to start a business, on average

Indicator	Croatia	Region
Procedures (number)	10	9.4
Time (days)	45	32

Croatia Risk Assessment

Country Rating

Rating: A4

A somewhat shaky political and economic outlook and a relatively volatile business environment can affect corporate payment behaviour. Corporate default probability is still acceptable on average.

Risk Assessment

Economic growth accelerated in 2007, driven by consumption and investment. Productivity gains and a buoyant job market contributed to this. Industrial activity remained robust. Despite rising food prices and energy costs, inflation continued to ease with the central bank maintaining its exchange rate stabilisation policy.

In 2008, domestic demand should remain dynamic, even with a decline in social allowances (non-renewal of exceptional payments linked to pensions) and a slight slowdown in the expansion of credit. Exports should continue to gain momentum, benefiting from the improvement in productivity.

Despite the growth of sales abroad and tourism revenues, however, external deficits will remain large with imports continuing to grow rapidly, fuelled by domestic consumption and the high import-content of exports and investments. To enhance its growth potential and counter the vulnerabilities resulting from its large current account deficit and high foreign debt, the country will have to continue the consolidation work on public sector finances and intensify the efforts on reform.

STRENGTHS

• The European Union integration process has enhanced Croatia's economic prospects with the country already benefiting from strong, essentially non-inflationary growth.
• Croatia boasts a higher level of development than most Balkan countries and an already advanced degree of economic convergence with Europe.
• With the country continuing to make substantial efforts on investment, infrastructure has notably improved.
• The country has great tourist potential with tourism currently representing 20 per cent of GDP.
• Better management of public sector finances along with privatisations have facilitated stabilising the extent of government debt.

• The current account deficit remains too large.
• The foreign debt of banks and companies has increased sharply.
• The expansion of credit and the exposure of households to exchange rate risk will bear watching.
• With the restructuring of the public sector lagging, it continues to play a large role in the economy and red tape continues to undermine the business climate.
• The pace of negotiations with the European Union continues to depend on implementation of politically difficult reforms.

• Agriculture
• Apparel
• Arts & Crafts
• Automobile
• Bags, Cases & Boxes
• Chemicals
• Computer Hardware & Software
• Construction & Real Estate
• Consumer Electronics
• Electrical & Electronics
• Energy & Environment
• Food & Beverage
• Furniture & Furnishing
• Health & Medicine
• Home Supplies
• Industrial Supplies
• Lights & Lighting
• Machinery
• Mineral & Materials
• Office Supplies
• Security & Protection
• Service
• Sports & Entertainment
• Telecommunications
• Textile
• Toys
• Transportation