The Digital Economy of Croatia Could Reach 15 Percent of GDP by 2030

The digital economy of Croatia grew by 16 percent annually from 2019 to 2021, and by 2030 its value could reach 15 percent of GDP, with the ICT sector likely being the main driver of this growth, according to McKinsey &Company.

This consulting-research firm conducted a new study 'Digital Challengers at the New Frontier', which covered ten countries in the Central and Eastern Europe region (including Croatia, Bulgaria, the Czech Republic, Latvia, Lithuania, Hungary, Poland, Romania, Slovakia, and Slovenia).

One of the conclusions of this research is that Croatia could achieve an increase in the share of the digital economy in GDP by about 6.5 percentage points by 2030, which would be the second-largest increase among the countries in the region.

– By accelerating the development of digital economies, Central and Eastern European countries could achieve up to 206 billion euros in additional annual value –  announced the Croatian office of this global company.

Classifying countries according to the development of their digital economies as 'digital challengers' (including Croatia along with most countries in the region), 'digital leaders' (such as Belgium, Denmark, Estonia, Finland, Ireland, and others) and 'big 5' (France, Italy, Germany, Spain, and the UK), McKinsey assesses that Croatia, as a 'digital challenger' could progress faster than others.

Such assessments are based not only on the annual growth of the digital economy of 16 percent over the past four years but also on the growth of digital commerce of 28 percent annually, which, they say, is significantly more developed in Croatia than goods trade, primarily due to tourism and online hotel and accommodation bookings.

In addition to estimating that the share of the digital economy in Croatian GDP could increase by approximately 6.5 percentage points by 2030, they also believe that by then Croatia could grow in the digital economy at an average annual rate of about 12 percent.

The ICT Sector in Croatia is Crucial for the Growth of the Digital Economy

– Digital commerce is expected to be the main engine of growth for the digital economy in most countries in the Central and Eastern Europe region, but in Croatia, it is expected that the ICT sector will be the main driver – emphasize McKinsey, adding that their research also showed that strong growth in the ICT industry, averaging nearly 20 percent annually, can lead to an increase in the digital economy.

They explain this with calculations that if the Croatian ICT sector grows on average by about 20 percent annually, by 2030 it will increase its value by up to five times, to approximately eight billion euros, thus becoming the main component of the digital economy in Croatia.

In this scenario, digital commerce would also continue to grow at a healthy annual rate of about 6  percent, increasing its value to approximately five billion euros by 2030.

– Compared to the conclusions from our previous research just two years ago, where it seemed that the digital economy of Croatia was stagnating and that the country was insufficiently participating in harnessing available potentials, the growth currently shown by the Croatian digital economy appears encouraging. This is comparable to global trends, as the COVID pandemic has more or less spurred the growth of digital commerce in the region, particularly the strong growth of ICT, and further investments in the digital economy are expected –  concludes Tomislav Brezinščak, Director of the Adriatic region and Partner at McKinsey & Company Tomislav Brezinščak.