Economic outlook:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||
Croatia has navigated well the COVID-19 crisis and the price shocks following Russia’s war of aggression on Ukraine. It has achieved robust output growth, rising employment and improving well-being, although inflation has surged. Integration into the euro and Schengen areas at the start of 2023 are testament to progress, and are providing a further fillip to the economy. Ensuring that fiscal policy is counter-cyclical and that lending supports productive investments can help contain inflationary pressures and sustain growth.
In line with EU standards, the Croatian Government has accepted the real estate tax with intesion to tax the property as an asset. The new tax system and real estate tax are encouraging for the market.
Capital Market
A few years ago the Eastern European stocks were the winners of a cash injection from the ECB. Then the region's main bourses: Warsaw, Budapest and Prague were the investors' favourites. Now the benefits from a fresh inflow of capital if the ECB start to flood markets with cheap money, will be the Budapest and Zagreb bourses, which almost have same market capitalisation. This growth has been fueled by listings of state-owned companies and favourable changes in regulation. Government plans to sell further shares in firms such electrical concern Koncar, Ploce and Vukovar ports, Petrokemija, Đuro Đaković holding, HPB bank, Narodne Novine etc.
Real Estate Market
The real estate market in Croatia is already well developed, and has benefited from a high level of local and international investment over the past years. The capital city Zagreb is the most active on the commercial property market, while the Adriatic coast expects its growth on the residential and tourist market.
The Croatian retail sector is known for its elevated overhead costs due to low sales volumes as well as high distribution costs because of geographic particularities. There has been a price war between retailers over the past two years, with companies competing to become more competitive in a market where prices dictate consumer behavior.
Since Croatia joined the European Union in 2013, retailers have focused on reducing suppliers’ prices by making use of cheaper imports from EU countries or by streamlining their logistics. The Croatian retail sector is known for its elevated overhead costs due to low sales volumes as well as high distribution costs because of geographic particularities. There has been a price war between retailers over the past two years, with companies competing to become more competitive in a market where prices dictate consumer behavior.
Construction sector plays a key role in the Croatian economy, accounting for approximately 5% of the total GDP. Issued building permits in 2015 was 6,328, increasing to 11,883 in 2024. The average selling price per m2 in Croatia amounted to EUR 2,652, while in Zagreb this number amounted to EUR 2,954. for the 2025.
Starting business in Croatia
- Setting up a legal entity
- A business in Croatia can be set up by foreigners (persons and legal entities) in about 2 weeks time.
- The most common form of legal entityis the is the “doo” - the Croatian equivalent to a LLC (limited liability company), which requires a minimum capital of 2.654 Eur.
- The corporate income tax level in Croatia is from 12% to 18%.
- Value added tax (PDV) rate is of 25%.