Raising defense spending to 3% of GDP could accelerate economic growth by 0.6 percentage points, according to a report from the Croatian Employers’ Association (HUP).
The EU’s €800 billion plan to strengthen defense capabilities has brought renewed attention to military investments. In 2023, the Croatian defense industry revenues reached €401 million, with exports surging 2.5 times to around €300 million. Leading companies include HS Produkt (firearms), Šestan-Busch (ballistic helmets), and Dok-Ing (robotic demining). Other key players specialize in drones (Orqa), robotics (Probotika), and armored vehicles (Đuro Đaković).
HUP suggests forming an interdepartmental task force to support industry growth, advocating for increased public investment, streamlined regulations, and expanded funding via Croatian Bank for Reconstruction and Development (HBOR) and an envisioned Defense Investment Fund. Enhanced collaboration with European defense firms, particularly in steel production and joint procurement, could further strengthen the sector.
The industry’s ability to secure new funding and government contracts will be crucial. Employers stress the importance of supporting SMEs through clearer procurement opportunities and prioritizing drone technology, given its rising strategic role in modern conflicts.