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- In 2025, it is projected that goods exports will continue to grow solidly, despite relatively weak demand growth in Croatia’s main trading partners such as Germany, Austria, and Italy
- According to a scenario in which these two sectors are most affected by potential US tariffs, the most exposed Croatian products would be pharmaceuticals worth $224 million, which account for 35 percent of Croatian exports to the USA
- The EU’s dependencies are significant, but strategic dependencies are in favor of the EU. The USA relies on the EU for 32 strategically important imported products, mainly in the chemical and pharmaceutical sectors, while the EU relies on only eight American products, among which beryllium plays the most prominent role
- The continuous erosion of EU corporations’ shares in the Chinese market, the erosion of market share in developing countries, as well as the Chinese industrial overcapacity coming to the shores of the EU, would deepen the EU’s economic problem
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Since Croatia joined the EU in 2013, its trade openness index has been increasing every year, except for the pandemic year of 2020. In 2015, the index value for Croatia first exceeded that of the EU and continued to rise to the current level of 124.5 percent compared to 106 percent recorded for EU-27. Trade integration has significantly stimulated growth and employment over the past decade and has also enabled a stable reduction in external debt as a percentage of GDP, which stood at 75.2 percent in the third quarter of 2024 and was lower than its peak levels of 113 percent in 2013.
The total value of exported goods and services has increased by an astonishing 14.57 billion dollars, from 34.24 billion dollars in 2019 to 48.81 billion dollars in 2023. Although trade was not the only factor contributing to growth, as personal consumption and investments in fixed capital driven by large net transfers from the EU budget and personal remittances played an increasingly prominent role, it still acted as a strong tailwind. Recent empirical research shows that Croatia’s growth is deeply connected to the dynamics of international trade and that the trade multiplier is generally a good predictor of actual long-term growth rates.
All these factors place Croatia’s growth in a league of its own compared to the other 26 EU member states, measured by the cumulative change in GDP growth of 19 percent from the fourth quarter of 2019 to the third quarter of 2024. It is striking that this cumulative growth was three times higher than the average growth rate for EU-27 and even higher than that in the USA.
In 2025, it is projected that goods exports will continue to grow solidly, despite relatively weak demand growth in Croatia’s main trading partners such as Germany, Austria, and Italy. On the other hand, a slight slowdown in service exports is expected due to increasing cost pressures in the travel sector. Overall, it is expected that the contribution of net exports to growth in 2025 will become negative in the context of strongly rising domestic demand (European Commission, 2024).
