Croatia - Country Commercial Guide
Aerospace and Defense

This is a best prospect industry sector for this country. Includes a market overview and trade data.

Last published date: 2021-09-16

Overview

Croatia has been a member of NATO since 2009. Supported by economic growth, the country has started a modernization of its armed forces, with the largest funds allocated to the air force. In 2019, the defense budget was $1.045 billion or 1.7% of GDP, representing a yearly increase of 10.1%. The economic downturn caused by the COVID-19 pandemic decreased the defense budget in absolute numbers in 2020, however the percentage of GDP remained at 1.7%. In 2021, the Croatian government decided to purchase twelve used Dassault Rafales F-3R from the French government for 999 million euros. The first jets are expected to arrive in 2024 to replace the outdated MIGs. This purchase, and the expected maintenance costs of the aircraft over the long term are likely to take up large portions of defense outlays.

The most developed and largest part of the Croatian Military is the Army. The Croatian Military had a total of 15,100 personnel in 2019: about half of personnel in the land army, 10% in the navy and 10% in the air force. This number is in line with the Long-Term Development Plan 2015-2024 of keeping staff numbers around 15,000. The plan also defines personnel as the key asset and emphasizes the importance of training and education.

Most of the defense equipment in Croatia is imported from Western countries. However, there are also some advanced defense equipment manufacturing companies in Croatia, including HS Produkt (firearms manufacturer, over 90% of their handguns are exported to the United States), Sestan-Busch (ballistic protective gear), and DOK-ING (demining equipment). The annual production of the Croatian defense industry was around $250 million in 2019, and it is expected to grow in the coming years with support of the European Defense Fund. Croatian defense manufacturers are gathered in the Croatian Defense Industry Competitiveness Cluster.

Opportunities

Modernization of outdated systems and platforms is planned in all segments of the Army. Key projects include:

· Upgrade of the Bradley infantry fighting vehicles donated by the U.S. government;

· Procurement of modern short-range air defense systems;

· Upgrade of the radiocommunication network;

· Procurement of Unmanned Aerial Vehicles;

· Upgrade of navy radars;

· Construction of patrol vessel.

Croatia also recognizes cybersecurity as a new segment of the defense sector. The country is developing warfare capabilities in cooperation with the EU and NATO partners.

Resources

· Adriatic Sea Defense & Aerospace (ASDA) Split, Croatia

· Ministry of Defense

· Croatian Defense Industry Competitiveness Cluster

U.S. Embassy - U.S. Commercial Service
Zdravko Kuzmic, Commercial Specialist
Zagreb, Croatia
Tel:  +385 (0)1 661 2090
Email: Zdravko.Kuzmic@trade.gov
Website: www.trade.gov/croatia