For faster and sustainable convergence
Zagreb, 21 September 2023
OECD ECONOMIC SURVEY OF CROATIA
@OECDeconomy @OECD oe.cd/Croatia
Growth is resilient
Note: The shaded area shows projections. Peers are an average of the Czech Republic, Hungary, the Slovak Republic and Slovenia.
Source: OECD Economic Outlook 113 (database), updated.
-10 -5 0 5 10 15 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 % Croatia Peers OECD GDP growth, annual
The labour market is tight
Labour market indicators
Note: 2023Q1 and 2023Q2 observations are OECD preliminary estimates, based on published labour force data adjusting for a series break between 2022Q4 and 2023Q1.
Source: OECD Economic Outlook (database).
5 6 7 8 9 10 11 12 -8 -6 -4 -2 0 2 4 6 2018 2019 2020 2021 2022 2023 % of labour force Y-o-y % change ← Employment growth Unemployment rate →
Inflation is slowly declining
Note: Core, headline and energy inflation are based on the harmonised consumer price index. Core inflation excludes energy and food products.
Source: OECD Economic Outlook
and Eurostat. -20 -10 0 10 20 30 40 -10 -5 0 5 10 15 20 2018 2019 2020 2021 2022 2023 % % Inflation, year-on-year ← Core inflation ← Headline inflation Energy inflation →
(database)
Banks are better capitalised than in
other countries
Source: IMF, Financial Soundness Indicators (database).
Q2
0 5 10 15 20 25 %
Regulatory Tier 1 capital to risk-weighted assets
2023 or latest available
Fiscal policy should avoid a widening deficit in 2023 and 2024
Fiscal balance and fiscal balance corrected for the business cycle
Fiscal balance, % of GDP Fiscal balance corrected for the business cycle,% of potential GDP
Note: The fiscal balance corrected for the business cycle measures the governments fiscal stance once cyclical variation in revenues and spending are taken into account and excludes net one-off operations.
Source: OECD Economic Outlook 113 (database), updated.
-8 -7 -6 -5 -4 -3 -2 -1 0 1 2 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Growth is projected to remain resilient in the short term
Source: Source: OECD Economic Outlook 113 (database), updated.
Annual growth rates, volumes unless specified 2021 2022 2023 2024 Gross domestic product (GDP) 13.1 6.2 3.0 2.4 Private consumption 9.9 5.1 2.3 2.3 Investment 4.7 5.8 2.6 2.6 Unemployment rate (% of labour force) 7.6 7.0 6.0 5.8 Consumer price index 2.7 10.7 8.5 4.3 Fiscal balance (% of GDP) -2.5 0.4 -0.1 -1.0 General government gross debt (% of GDP, Maastricht definition) 78.3 68.8 63.8 61.0
The Recovery and Resilience Plan is furthering progress with reforms and investment
Allocation and disbursement of NextGenEU grants and loans
Note: Disbursements as of 16 June 2023.
Source: European Commission, Recovery and Resilience Scoreboard.
0 2 4 6 8 10 12 14 16 18 % of GDP Allocation Disbursement
Robust growth needs to continue for incomes to converge
Note: Real GDP per capita at 2015 prices and PPPs.
Source: OECD National Accounts database.
Real
20 30 40 50 60 70 80 90 100 2000 2005 2010 2015 2020 % Croatia Czech Republic Hungary Lithuania
GDP per capita relative to the OECD average
Achieving faster convergence by boosting productivity and investment
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A more dynamic business environment would spur productivity growth
Labour productivity
Note: Figure shows labour productivity as % of the USA values, taken to be the global technological frontier. Labour productivity is measured as real GDP at current USD at purchasing power parity, divided by number of persons employed. Peers is an average of the Czech Republic, Hungary, the Slovak Republic and Slovenia.
Source: Penn World Table Version 10.0; OECD calculations.
50 55 60 65 70 75 80 85 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018
Peers
% of USA Croatia
Better monitoring regulatory burdens would unlock the benefits of
ongoing reforms
Product
market regulation index
Index, 0-6, 0 indicates most competition-friendly regulations
Notes: OECD Product Market Regulation Index, preliminary 2018 and 2023 values applying the 2023 methodology.
Source: OECD 2023 PMR database (July 2023).
0.0 0.5 1.0 1.5 2.0 2.5 Croatia OECD 2023 2018
Encouraging out-of-court processes would make the judicial system more responsive
Estimated time to resolve litigious civil and commercial cases at first instance, 2021
Note: Unweighted average for EU and Peers, which includes the Czech Republic, Hungary, the Slovak Republic and Slovenia.
Source: European Commission (2023), The 2023 EU Justice Scoreboard.
0 100 200 300 400 500 600 700 800
Days
Stronger governance of state-owned enterprises is key given their share in the economy
SOEs’ share of total non-agricultural dependent employment, 2019
Source: OECD (2021), OECD Capital Market Review of Croatia: Capital market reforms for recovery and improved business dynamics in Croatia.
0 1 2 3 4 5 6 7 8 9 10 %
Encouraging ethical behaviour among public officials would complement anti-corruption measures
Corruption by sector, “Control of Corruption”
Scale: 0 (worst) to 1 (best), 2021
Executive embezzlement
Judicial corruption
Executive bribery
Public sector embezzlement
Public sector bribery
Legislature corruption
Note: Unweighted average for OECD.
Source: Varieties of Democracy Project, V-Dem Dataset v12.
0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1
OECD Croatia
Raising skills and participation to promote incomes and equality of opportunities
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EIB (2022), Investment Survey. 0 20 40 60 80 100 % Share of firms reporting lack of right skilled staff as an obstacle to investment, 2021
A big push on training and activation would help solve shortages of skilled workers
Source:
Employment rates among younger and older persons can be strengthened
Employment rates, 2022
Source: Eurostat and OECD Labour Force Statistics (database).
Croatia OECD 20 30 40 50 60 70 80 90 100 % Age group
Women 20 30 40 50 60 70 80 90 100 % Age group
Men
A.
B.
Pension reform should encourage Croatians to retire later
Average number of years worked, 2019
Years
Note: An unweighted average across men and women is shown.
Source: European Commission (2021), Ageing report 2021
20 25 30 35 40 45 50
Longer working lives would reduce old-age poverty
Note: The severe material deprivation rate is the share of respondents living in households unable to afford at least four of the following : unexpected expenses, a oneweek annual holiday away from home, a meal involving meat, chicken or fish every second day, the adequate heating of a dwelling, durable goods like a washing machine, colour television, telephone or car, or are confronted with payment arrears.
Source: Eurostat (2022), Income and Living Conditions (database).
0 2 4 6 8 10 12 18 and over 18-24 25-49 50-64 65 and over 50-64 65 and over Overall Employed Retired %
Croatia EU27
Severe material deprivation rate, 2020
Attracting skilled immigrants and encouraging return migration would increase labour supply
Migration flows
-50 -40 -30 -20 -10 0 10 20 30 40 50 2010 2012 2014 2016 2018 2020 Thousands Immigrants Emigrants Net migration
Source: United Nations, World Population Prospects 2022, and Eurostat.
Increasing housing supply and reforming property taxation would improve housing access and mobility
Number of dwellings per 100 inhabitants 2020 or latest available year
Note: Unweighted OECD average.
Source: OECD Affordable Housing Database – http://oe.cd/ahd; European Statistical System, Census Hub website.
0 10 20 30 40 50 60
Ensuring robust growth is also sustainable
23
Further investing in public transport and restricting polluting cars would reduce air pollution
Note: Air pollution measured in PM2.5 particles.
Source: OECD Environmental Statistics (database).
% of population exposed to particle air pollution 0 5 10 15 20 25 30 2020 or latest available year 2010
Pricing greenhouse gas emissions consistently and investing in energy efficiency would help reduce emissions
Greenhouse gas emissions
Note: GHG emissions include land use, land-use change and forestry (LULUCF).
Source: OECD (2022), Environment Statistics (database).
0 5 10 15 20 25 30 1990 2000 2010 2020 2030 2040 2050 Mt CO2 eq.
emissions (historic) Projections to meet current national target
Total
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