GDP: Croatian economic growth accelerates to 3.6 percent

Thanks mainly to the growth in investments and personal and government consumption, the Croatian economy grew in the fourth quarter of last year for the 20th consecutive quarter, by 3.6 percent on an annualized basis, significantly faster than in the previous quarter.

The Croatian Bureau of Statistics (CBS) published its first estimate on Friday, according to which the gross domestic product (GDP) in the fourth quarter of last year grew by 3.6 percent in real terms compared to the same period last year.

This is the 20th consecutive quarter that the economy has grown, and significantly faster than in the previous quarter, when growth was 2.3 percent. Thus, according to the first estimate, the economy grew by 3.2 percent in the entire last year.

Strong growth in consumption and investment

According to the CBS, household consumption, the largest component of GDP, grew by 2.6 percent annually in the last quarter of last year, faster than in the previous quarter, when growth was 1.9 percent. Gross fixed capital formation, on the other hand, grew by 6.9 percent, slower than in the previous quarter's 7.5 percent. Government consumption grew by 4.7 percent, after growing by 3.8 percent in the previous quarter.

Exports of goods and services, on the other hand, grew by 1.5 percent annually, after a 1.1 percent decline in the previous quarter. Exports of goods grew by 2.4 percent, and services by 1.6 percent. Imports of goods and services, on the other hand, increased by 0.3 percent, significantly less than in the previous quarter's 2.4 percent. Imports of goods fell by 0.4 percent, while imports of services increased by 3.1 percent.

Growth still faster than the EU average

According to seasonally adjusted data from the Central Bureau of Statistics, the economy grew by 3.3 percent annually in the last quarter of last year, and by 1.4 percent quarterly. Thus, the growth of the domestic economy on an annual basis remains significantly faster than the average in the European Union (EU).

Eurostat recently announced that in the past quarter, the EU economy, according to seasonally adjusted data, grew by 0.3 percent compared to the previous quarter, and by 1.4 percent annually. The Eurozone economy, on the other hand, grew by 0.3 percent quarterly and 1.3 percent annually in that quarter.

Plenković: Economy in full swing, stable growth in 2026 as well

Prime Minister Andrej Plenković commented on X on Friday on the year-on-year GDP growth of 3.6 percent in the fourth quarter of last year, stating that the economy is in full swing and that stable growth can be expected in 2026 as well.

“In the fourth quarter of 2025, real GDP growth was 3.6 percent compared to the same period in 2024. GDP growth in the whole of 2025 is 3.2 percent, which is in line with the government's projections,” Plenković wrote.

He also pointed out that Croatia is one of only four countries that has recorded a continuous GDP growth trend since the beginning of 2021, and for 20 consecutive quarters. According to him, this confirms the fact that the economy is still in full swing and, as he wrote, "we can expect stable growth in 2026."

“This growth is the result of increased investments (especially through the absorption of funds from the National Investment Fund and EU funds), as well as household consumption and exports. Compared to other EU member states, the Croatian economy in the 4th quarter of 2025 was among the four fastest growing (after Ireland, Malta and Cyprus), growing faster than at the level of the entire European Union (1.5 percent) and the Eurozone (1.3 percent). We continue to approach the average development of the EU,” said Plenković in a post on X.

Bule: Unusually long upward phase

State Secretary at the Ministry of Finance Matej Bule said that data on GDP growth in the fourth quarter, at 3.6 percent on an annual basis, confirm the continued strong growth of the Croatian economy, which is many times stronger than the average of the euro area and the European Union.

He pointed out that the economy has been growing for 20 consecutive quarters, or five years, and that it accelerated further at the end of the year, which shows its strength and momentum. Based on this, as well as high-frequency indicators, he expects continued growth in 2026 and further convergence towards the EU average.

Investments contributed the most to growth, which increased by almost seven percent and accounted for half of the total year-on-year GDP growth. Despite the unfavorable international environment and weak growth in major foreign trade partners such as Germany, Italy and Austria, net foreign demand also made a positive contribution, which, according to Bule, demonstrates the resilience and competitiveness of the Croatian export sector.

He added that the manufacturing industry and the ICT sector also contributed positively, and Croatia, with the exception of the pandemic contraction, has been growing for ten years while reducing macroeconomic imbalances, maintaining fiscal discipline and social cohesion.

Šaravanja: The post-pandemic take-off phase is over

The chief economist of the Croatian Chamber of Economy, Goran Šaravanja, pointed out that the domestic economy continued to grow last year, but with signs of slowing down, and warned of growing imbalances in public finances and the balance of payments.

“Although GDP growth was solid, especially in the context of growth dynamics in the EU, it was the lowest in the post-pandemic period. The pressure on the budget, primarily due to the extreme growth of wages in the public sector during 2024, which spilled over into 2025 as a permanent cost, as well as the growth of social benefits, led to an increase in the budget deficit, which in 2025 approached the three percent of GDP mark,” Šaravanja pointed out.

He added that at the same time, high prices for services in tourism and trade can clearly no longer compensate for the stagnation in the number of tourist overnight stays, so there is no real growth in foreign exchange income from tourism, which is a key counterweight to the deficit in the trade of goods, which deepens the imbalance in the current account of the balance of payments.

“As in the previous year, GDP growth was based on resilient personal consumption (+2.5 percent), the growth of which was maintained by increases in employment, wages and credit indebtedness, and on investments (+6.1 percent), financed mostly from EU funds, especially through the Recovery and Resilience Mechanism. However, the same items that generate current growth are also creating imbalances, because economic growth is not keeping up with the growth in productivity and competitiveness,” Šaravanja noted in his commentary.

“Although industry made a positive contribution to GDP growth for the first time in two years (growth of 2.9 percent), the slowdown in growth in other sectors, especially construction (from 15.1 to 7.3 percent) and tourism and trade (from 5.9 to 2.7 percent), was more pronounced and slowed down overall GDP growth,” he stated.

“Namely, the construction boom was exhausted after much of the reconstruction after the earthquake was completed. Real trade growth slowed due to persistently high inflation, which reduced consumer optimism, as well as slower growth in disposable income. At the same time, due to the increase in the prices of services in tourism and trade and the stagnation of the number of tourist overnight stays, the value of foreign exchange income from tourism, which is a key counterweight to the trade deficit, is falling in real terms,” he noted.

Source: HRT