Investments Continue, but Global Uncertainty Has Made Some Cautious

Investment announcements in the Croatian economy have started arriving at a furious pace, but global upheavals have dampened investment plans for this year. In the industrial sector, the leader is Končar, which has announced a continuation of investments exceeding 140 million euros for this year. In addition to expanding production facilities, plans include the construction of new ones, among which stands out a factory in Texas, USA. The company plans to build the factory in the USA by 2027 in collaboration with its partner, Sanmina Corp., with which it signed a joint development agreement for a customized medium-voltage transformer at the end of last year.

Investment Momentum

The state has also given a boost to Končar’s investment momentum. At the beginning of March, the project for the expansion of energy transformer production that Končar is developing in partnership with Siemens, valued at 260 million euros, was included in the List of Strategic Investment Projects of the Republic of Croatia. This is the project ‘KPT Transformers – Capacity Expansion for Global Needs’ carried out by Končar – Energy Transformers.

It includes the construction of a new production line and a significant increase in capacity, primarily in response to the strong growth in global demand for energy transformers. As explained by Končar and Siemens Energy, the expansion will create around 350 new jobs, of which about 250 will be in production and 100 for highly qualified specialists. According to the Ministry of Economy, the project has reached the level of administrative and project readiness required for strategic investment status, which should theoretically accelerate its realization. However, by the time of writing, there was no response from Končar regarding their expectations in this regard.

Investments are not only being made in industry but also in another vital sector of the domestic economy, tourism. At the end of March, media attention was drawn to the news that a construction site for a luxury hotel of an international brand was opened last month at the site of the former Zenica resort in Kaštel Stari. The project is expected to be completed by the end of 2028, but its value has not been disclosed. The investor is the Odien group owned by American entrepreneur Michael Saran.

Tourism Investments

This is an investment and development company operating in several sectors, from real estate and hospitality to energy and infrastructure. It is not unknown in domestic tourism – Odien owns the Le Méridien Lav resort in Split and is an investor in it. The new hotel in Kaštel Stari is planned as a facility with 150 rooms, pools, a wellness center, and conference facilities. According to the investor’s announcement, it will operate year-round. This, of course, is not the only investment in domestic tourism, neither this year nor in the coming years.

The leading tourism company Valamar Riviera accepted the Draft Business Strategy until 2030 at the end of February. The proposed strategy is based on preparing an investment plan of approximately 820 million euros aimed at completing key projects in the Parenzana and Brulo clusters in Poreč and Capo Fronte on Rab. These investments should enable the company to reach approximately 800 million euros in revenue by 2030, with about 50 percent generated outside the main tourist season.

Adris is also entering a multi-year investment cycle. The Rovinj company will initiate capital investments exceeding 480 million euros between 2026 and 2028, averaging 160 million euros per year. It will invest more than 330 million euros in its tourism segment, 91 million in insurance, 17 million in healthy food, 31 million in green energy, and 11 million in maintaining its real estate portfolio. The majority of investments in the tourism segment relate to the Marjan hotel in Split, amounting to more than 66 million euros. The investment plan in Istria is valued at 233 million euros. 22 million euros will be invested in the renovation of Zagreb hotels, and more than 9 million euros in those in Dubrovnik.

In recent years, Hrvatski Telekom (HT) has also been a major investor. In its report for 2025, the largest domestic telecom boasted investments of 268.4 million euros, 10.5 percent higher than the previous year. The largest investments were related to the expansion of the optical network, so during the year HT reached coverage of one million households and business users across the country, including rural areas.

– Significant investments were also made in modernizing the mobile network, developing data centers, and introducing innovative digital and ICT solutions based on artificial intelligence. The company also continued projects for building broadband infrastructure co-financed by European Union funds, further contributing to reducing the digital divide and ensuring balanced digital development in the country, HT explains.

However, for this year, the company announced a moderate, single-digit decline in capital investments. They could not speak about specific amounts, but the company revealed that the investment focus remains unchanged and will be directed towards ‘further development of gigabit infrastructure, including the expansion of the optical network and improvement of 5G coverage, as well as the development of data capacities needed for further digitalization and application of artificial intelligence.’

Gradual Slowdown

Although several of the examples mentioned suggest that the investment momentum of companies is in full swing, the broader picture is not so optimistic, especially since investments have been slowing down over the past two years. According to an analysis by the Croatian National Bank, the growth of gross investments in fixed capital in Croatia has significantly slowed after showing extremely high rates in the post-pandemic period, largely driven by private investments.

During 2022 and 2023, the growth of investments in the private sector has significantly strengthened and was further supported in 2023 by a strong increase in public investments. Over the past two years, the growth of private investments has gradually slowed, particularly pronounced at the beginning of 2025 due to uncertainties caused by the trade war. Public investments continued to grow relatively strongly, but overall they have significantly slowed down given the dominance of private investments, as stated in the Macroeconomic Trends and Forecasts of the central bank.

Another indicator, corporate lending, shows how global uncertainty and the threat of stagflation in most developed economies have taken their toll. According to the latest data from the HNB, investment loans in January increased by 11.7 percent year-on-year, which means they have slightly slowed compared to the growth rate of 12.3 percent in December. Recall that last year, investment loans increased by a total of 12 percent.

Reasons for Caution

The chief economist of the Croatian Chamber of Economy, Goran Šaravanja, expects a slower pace of growth in investment loans. – We can also expect that the economic sectors where investments were agreed upon before the newly emerged situation will lead in investments, such as infrastructure projects, especially railways and roads like the Istrian Ypsilon – emphasizes Šaravanja.

When it comes to infrastructure or construction projects, statistics also provide reasons for caution. According to the latest provisional data for January, the Croatian construction sector continues the trend of slowing growth with minimal annual change and a more pronounced monthly decline in activity. Namely, seasonally adjusted data from the Croatian Bureau of Statistics (DZS) show that the volume of construction work increased by only 0.2 percent year-on-year, indicating almost stagnation.

On a monthly basis, construction activity recorded a decline of 2.6 percent. Despite this, analysts at Raiffeisen Bank in their analysis believe that construction should continue with positive trends in 2026, albeit at somewhat more moderate growth rates. In this regard, funding from European funds will continue to be an important supporting factor.

– Therefore, we expect a continued solid contribution of investments to GDP, i.e., the construction sector’s gross added value – analysts believe.

Where to Invest

Goran Šaravanja states that there are similar expectations regarding investment activity from both the state and the private sector, with the implementation of existing contracts delayed in realizing new investment activities planned for this year.

– Given Croatia’s geographical position, we expect that private investments in the logistics sector will continue, although we would not be surprised by a certain slowdown in investments. The current situation is an additional signal to direct investments towards strengthening the energy system, from the electricity grid to energy sources and improving policies for balanced regional development, says the HGK economist.

The dampening of investments is logical to some extent because the world has become uncertain and unpredictable. However, such an environment is an additional argument not to halt investments – because uncertain times must pass sooner or later.