EU Commission improves Croatia's 2024 GDP growth f'cast to 3.3%

"Croatia’s GDP is forecast to grow by 3.3% in 2024 and 2.9% in 2025, largely driven by strong household consumption," the Commission said in its Spring 2024 Economic Forecast.

The EU executive expects the expansion of Croatia's economy to decelerate in 2025 as consumption growth momentum moderates due to slower private and public wage increases.

Last year, Croatia’s economy expanded by 3.1%.

Croatia's labour market is expected to remain tight, with employment continuing to grow and the unemployment rate reaching new lows, the Commission said. It expects the unemployment rate, which was 61.% last year, to decline to 5.8% in 2024 and 5.6% next year.

Inflation is projected to continue its gradual decline over the forecast horizon, from 8.4% in 2023 to 3.5% this year and 2.2% in 2025.

The general government debt is set to decrease despite an expected rise in general government deficit to 2.6% of GDP in 2024, as the new public wage act and social assistance measures put further pressure on expenditure, the Commission said. In 2023, the general government deficit increased to 0.7% of GDP. In 2025, the general government deficit is set to remain at 2.6% of GDP, as revenue is supported less by inflation while current and capital expenditure increase despite the complete phasing-out of energy measures.

In spite of the widening deficit, the debt-to-GDP ratio is expected to decrease from 63% in 2023 to 59.5% in 2024, due to robust GDP growth and debt-reducing stock-flow adjustments to take account of financial transactions, according to the Commission.