The Growth Rate of the Croatian Economy is on a Declining Trajectory

The World Bank has reduced its GDP growth forecast for Croatia in 2025 from 3.5% to 3.1%, the European Commission from 3.3% to 3.2%, and the Croatian National Bank to 3.2%, while the most pessimistic is the Croatian Employers’ Association, which predicts growth of 2.5% compared to the previously forecasted 2.7%. Unlike last year, when growth estimates from macroeconomists and economic institutions were revised upwards in the spring, this year’s forecasts almost uniformly indicate a slight downward trajectory, signaling a slowdown in the Croatian economy.

– We have slightly lowered the GDP growth estimate for 2025 to 2.5% based on poorer prospects in the euro area, but fiscal expansion, a stable labor market, and construction continue to strongly support aggregate demand. GDP growth in the first quarter slowed to 3% year-on-year, down from 3.8% in 2024, due to slower growth in personal consumption and lower dynamics in construction. Despite solid support for purchasing power thanks to strong real wage growth, new jobs, and consumer lending, the consumption growth rate is half as slow as last year, reflecting a boycott of stores and a delayed start to the tourist season due to the later Easter. In the second quarter, we still expect solid real GDP growth of around 2.5% due to strong wage growth in the public sector, a better tourist pre-season, accelerated growth in corporate loans, and strengthening construction activities – forecasts Hrvoje Stojić, chief economist of the Croatian Employers’ Association.

The smallest growth in five quarters

The slowdown is also signaled by CEIZ, the index of the Economic Institute, which has been continuously decreasing since November 2024. In March 2025, its value was 2.92 index points lower compared to the same month last year.

– Compared to the same month of the previous year, in March 2025, only the volume of industrial production increased, while the number of tourist arrivals, retail trade turnover, and VAT revenues fell – state the EIZ, estimating based on the index value trends that growth in the first quarter of this year will be 2% year-on-year, which would be the slowest quarterly growth in the last five quarters.

The main component of GDP, personal consumption, will grow slower this year than last year.

– Household consumption is growing slower than last year, which reflects slower wage growth in nominal and real terms compared to 2024, lower inflation rates than at the beginning of the year, and less need for purchases, e.g., cars and durable consumer goods that were realized in previous years. The slower consumption growth has also been influenced by the boycott of stores at the beginning of the year and a series of bad news from the media, along with possible geopolitical risks and even more adverse effects of American tariffs. Consumer pessimism is not currently more pronounced, which keeps household consumption growth at a high level, with a strong contribution to GDP growth – says Marijana Ivanov, a professor at the Faculty of Economics in Zagreb.

Pessimism and optimism among entrepreneurs vary depending on the sector. While some are satisfied with the volume of work, such as Mirko Habijanec, co-owner of the construction company Radnik from Križevci, others, like Dražen Oreščanin, one of the founders of the company Poslovna inteligencija, note that the impact of global uncertainty and trade tensions is already being felt and accordingly expect a slowdown in the economy.

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