Croatia - Country Commercial Guide
Investment Climate Statement
Last published date:

The U.S. Department of State’s Investment Climate Statements provide information on the business climates of more than 170 economies and are prepared by economic officers stationed in embassies and posts around the world. They analyze a variety of economies that are or could be markets for U.S. businesses.  The Investment Climate Statements are also references for working with partner governments to create enabling business environments that are not only economically sound, but address issues of labor, human rights, responsible business conduct, and steps taken to combat corruption.  The reports cover topics including Openness to Investment, Legal and Regulatory Systems, Protection of Real and Intellectual Property Rights, Financial Sector, State-Owned Enterprises, Responsible Business Conduct, and Corruption.

Executive Summary

Croatia celebrated 10 years of European Union membership in July 2023, which has enhanced its economic stability and provided new opportunities for trade and investment. As of January 1, 2023, Croatia is a fully integrated member of the European Union, having adopted the euro as its currency and entered the Schengen zone. In addition to its EU membership, characteristics that make Croatia an attractive destination for foreign investment include a geostrategic location with diverse topography and temperate climate, well-developed infrastructure, and a well-educated multilingual workforce. Historically, the most promising sectors for investment in Croatia have been tourism, telecommunications, and pharmaceuticals and healthcare, but investment opportunities are growing in Croatia’s robust IT and clean energy sectors, with the government announcing plans to add more than 2500 MW of solar, wind, and geothermal energy to the grid by 2030. Croatia also offers visas for so-called “digital nomads” to work in Croatia for up to one year without having to pay local taxes.

The Croatian economy achieved better-than-expected 6.3 percent GDP growth in 2022, double the growth rate of the EU.  The tourism sector, which accounts for as much as 20 percent of GDP, brought in €13.1 billion in revenue in 2022, exceeding the record-breaking 2019 season by almost 24 percent. Largely due to Russia’s aggression against Ukraine and the resulting energy crisis, average inflation in 2022 reached 10.2 percent. To help both businesses and households cope with increased costs of energy and food, the government implemented two economic relief packages consisting of subsidies and price caps totaling $4.5 billion and covering the period from October 1, 2022, to September 30, 2023. Unemployment in January 2023 was at 6.5 percent. The European Commission estimates the Croatian economy will grow 1.8 percent in 2023 and 1.9 percent in 2024, with inflation predicted to drop to 6.9 percent in 2023 and 1.6 percent in 2024.

Croatia will receive nearly $30 billion in EU funding through 2030, including approximately $5.4 billion through the EU’s Recovery and Resilience Facility (RRF), which has the potential to provide a significant boost to the economy if the government directs the funds to productive activities that stimulate job creation and economic growth. The government intends to spend approximately 40 percent of RRF funds in support of climate-related and clean energy objectives, including initiatives to improve energy efficiency in public and private buildings, accelerate development of renewable sources of energy, modernize the electricity distribution and transmission grid to facilitate the integration of renewable energy sources, and promote greater investments in geothermal energy. OECD membership is one of the Croatian government’s top foreign policy priorities, and Croatia is hoping to complete its accession process by 2025.

The Croatian government has taken positive steps to improve the business climate, including working on judicial reform, which investors have historically cited as one of the greatest barriers to investment. The economy remains burdened by underperforming state-owned enterprises, low regulatory transparency, and permit approval delays that impede project development, particularly in the energy sector. The COVID-19 pandemic accelerated digitalization efforts, which has helped decrease excessive bureaucratic procedures for both citizens and companies. Government reforms also seek to liberalize the services market, diversify capital markets, and improve access to alternative financing, and reform tax incentives for research and development. Croatia’s labor laws provide strong protections to workers and there are no risks to doing business responsibly in terms of labor laws and human rights. The government is willing to meet at senior levels with interested investors and to assist in resolving problems.

To access the ICS, visit the U.S. Department of State Investment Climate Statements’ website.