Page 29 - bne IntelliNews Southeastern Europe Outlook 2025

2.4.1 GDP growth
Croatia's economy was one of the fastest growing in the EU in 2024,
but this growth is expected to moderate somewhat in 2025.
Several factors are driving this economic expansion. Household consumption is anticipated to increase due to rising real incomes, which will enhance domestic spending. Significant investments, particularly those funded through European Union programmes, are expected to continue bolstering the economy. Employment growth and historically low unemployment rates will reportedly support further domestic demand.
Risks to these projections include higher-than-expected wage increases, potential supply constraints in tourism, and possible delays in the absorption of EU funds due to supply bottlenecks in construction, according to the European Commission. External factors such as geopolitical tensions and subdued growth in major trading partners could also negatively affect Croatia's economic projections.
The Croatian National Bank (HNB) has updated its economic outlook, forecasting a GDP growth rate of 3.7% for 2024 and 3.3% in 2025, driven by robust private consumption, bolstered by a strong labour market, EU-funded investments and steady government spending.
The European Commission forecasts Croatia’s economy to grow by 3.3% in 2025 and 2.9% in 2026, down from an expected 3.6% in 2024, as wage and consumption growth slow.
The World Bank expects the economy to expand by 3% in 2025, while in 2026 it should slow down to 2.8%.
The International Monetary Fund (IMF) projects Croatia’s economic growth at 3.4% in 2024 and 2.9% in 2025, driven by robust household incomes and investment from EU funds.
2.4.2 Industrial production
Industrial production in Croatia has experienced fluctuations. In May 2024, industrial production fell by 3.3% compared to the same month in the previous year. This decline was driven by significant drops in electricity, gas and air conditioning supply, which plunged by 17.4%, while manufacturing decreased by 1.9%, and mining and quarrying by 0.9%.
The situation worsened in June 2024, with industrial production experiencing an 8.3% y/y decline. This was the sharpest drop since May 2020, reflecting ongoing challenges in key sectors.
29 SE Outlook 2025 www.intellinews.com