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
A fully integrated member of the European Union, the Schengen area, and the eurozone, Croatia’s strong economic growth and EU market access provide new opportunities for trade and investment. In addition to its EU membership, Croatia’s geostrategic location with diverse topography and temperate climate, well-developed infrastructure, multiple multi-use ports, secure energy supply, and stable and responsive government make it an attractive destination for foreign investment. Croatia enjoys an A- rating with a stable outlook from both Fitch and Moody’s credit ratings agencies, and an A- with a positive outlook from Standard and Poors. 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, robotics, and energy sectors. Railway infrastructure is at the top of the government’s list for refurbishment, with an expected $6.5 billion to be invested in upgrades by 2035. 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 grew 3.8 percent in 2024, significantly faster than the EU’s average 1 percent growth. The tourism sector, which drives as much as 25 percent of GDP, brought in $16.2 billion in revenue in 2024, exceeding 2023 revenues by 2.7 percent. Rising wages and high household consumption drives higher-than-eurozone-average inflation, which reached 4.5 percent in December 2024 compared to the eurozone average of 2.4 percent. The European Commission estimates the Croatian economy will grow 3.3 percent in 2025 and 2.9 percent in 2026, with inflation predicted to decrease to 3.4 percent in 2025 and 2 percent in 2026.
The Croatian government continued its economic relief packages designed to ameliorate high energy and food costs and extended subsidies and price caps totaling $7 billion through September 30, 2025. Reflecting a contracting labor market, the steadily decreasing unemployment rate dropped to 5.1 percent in March 2025.
Croatia will receive nearly $30 billion in EU funding through 2030, including more than $10 billion through the EU’s Recovery and Resilience Facility (RRF), which has the potential to provide a significant long-term 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 hopes to complete its accession process in 2026.
The Croatian government has taken positive steps to improve the business climate, including working to address judicial efficiency, 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 World Bank also identified continued heavy investment in the tourism sector as a risk to long-term growth, recommending diversification toward the IT sector and other growth industries. The government has prioritized digitalizing government services and judicial registries, decreasing excessive bureaucratic procedures for both citizens and companies. Government reforms also seek to liberalize the services market, diversify capital markets, 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. Employers cite labor shortages, especially in construction, food production, and hospitality sectors, as a significant barrier to growth and efficiency. Growing numbers of foreign workers fill temporary positions in high-demand sectors – Croatia now hosts more than 600 private agencies that deal solely with importing foreign labor. 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.