Croatia

Croatia

Croatia is an Eastern European country with a long coastline on the Adriatic Sea. Encompassing more than a thousand islands, it’s also crossed by the Dinaric Alps. Its inland capital, Zagreb, is distinguished by its medieval Gornji Grad (Upper Town) and diverse museums. The major coastal city Dubrovnik has massive 16th-century walls encircling an Old Town with Gothic and Renaissance buildings. Croatia’s economy is benefiting from an improved external environment and strong private consumption, and so far seems to have been only slightly affected by the consequences of food and retail group Agrokor’s ongoing restructuring process. In the first four months of the year, exports expanded by almost a fifth—with shipbuilding recording exceptionally strong growth—on the back of robust demand from both European Union trading partners and the Balkan states. Moreover, the latest available data on tourist inflows shows that in the period from January to May arrivals surged by 15%, which translated into unemployment reaching fresh multi-year lows in both May and June. This, together with rising wages, both in the public and private sectors, is fueling private consumption, as suggested by healthy retail sales readings so far this year. In July, Fitch Ratings affirmed Croatia’s BB rating with a stable outlook, highlighting favorable cyclical conditions but also the country’s weak potential growth compared to peers due to adverse demographics and structural rigidities.

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