ZAGREB (Croatia), April 16 (SeeNews) – The association of Croatian employers, HUP, said on Wednesday it has reduced its projection for the country’s economic growth this year to 2.5% from 2.7% due to weaker outlook for the euro area.
Croatia’s economy expanded by 3.8% last year.
HUP has also lowered its growth forecast for next year to 2.5% from 3.0% due to the unfavourable impact of fundamental global trade policies, reduced fiscal impulse, and cooling of the labor market, the employers’ association said in a presentation of its quarterly economic outlook published on its website.
In 2026, Croatia will increasingly share the economic fate of the euro area, where analysts are continuously cutting GDP growth forecasts to just 1.0% or lower, it added.
HUP expects that the EU-harmonised inflation in Croatia will decline from 4.0% last year to 3.8% in 2025 and 2.5% in 2026.
Croatia lags behind the EU average and the central and eastern European economies in investments, HUP said. According to the association, although that investments in Croatia remain supported by a record inflow of European Union funds at a net level of 3.5% of GDP per year and by investments in productivity by internationally integrated companies, private investments are being impacted by worsened real financing conditions, uncertainty in the environment and slower growth of loans to companies.
HUP believes that Croatia must target investments in sectors that create higher added value and the tool for this is the investment promotion legislation, which must be competitive and encourage investments in research and development, by increasing subsidies, delimiting the amount of support, further deregulation and internationalization through value chains.
The association expects the working population in the Adriatic country to decline by more than 100,000 in the next five years, and for the needs of GDP growth of 3% per year, it estimates the need for labor imports at 400,000 by 2030.
By smarter activation of the domestic young workforce and targeted immigration, while attracting highly qualified workers in sectors where productivity is growing faster than the EU average, such as ICT, tourism, construction, agriculture and parts of industry – which has a positive impact on private investment and general productivity – it is possible to halve the need for foreign workers to 20-25 thousand per year, it added.