The surge in inflation is slowly abating
Growth must remain robust for incomes to catch up
Raising participation in adult education can help fill skills gaps
Since the early 2010s recession, incomes have been converging and well-being has improved
Continuing reforms can sustain higher growth
Consumption and exports have lifted GDP growth, while investment has lagged
Croatia’s energy support measures are substantial and are largely price subsidies
European markets, tourism services and manufactures account for most exports
Inflation is abating from the recent surge, although price pressures have broadened
The banking sector’s health appears solid
Fiscal policy remains supportive while monetary conditions are tightening
Rising prices and growth have reduced the public debt ratio
Modest primary surpluses and stronger growth through continued reforms will reduce the debt ratio to below 60%
Overall spending is near OECD countries, although the public payroll is high
Public investment is highly reliant on European funds
Croatia’s Recovery and Resilience Plan is substantial
Overall public service numbers are above most OECD countries, but some wage rates are lagging
Tax revenues are moderate, and are weighed towards indirect taxes
Despite recent progress, informality remains significant in Croatia
Achieving emission reduction goals will require large cuts in emissions intensity
Reducing emissions from energy use is key
Heavy use of an ageing car fleet contributes to high transport emissions
Renewable energy sources already supply an important share of Croatia’s energy
Improving waste collections and recycling would reduce emissions
Damages from climate-related events have been modest but are likely to increase
Productivity catch-up with the average of OECD countries has slowed
Closing productivity gaps requires improving performance across all sectors
Overall productivity is weighed down by many unproductive firms
Strong business dynamism translates less well into sustainable productivity gains
Private and foreign direct investment have lagged peers
Croatia’s formal regulatory framework has improved
Regulatory burdens, in practice, are a major obstacle to investments in Croatia
Croatia has improved its regulatory framework
Resolving cases is slow and trust in courts and judges is low
Large numbers of incoming and pending cases pressure courts’ performance
Perceptions of corruption are high
Many businesses report clientelism to be a problem
Experience with corruption is common and tolerance of it is relatively high
Businesses’ use of external financing is low
Demand for finance is relatively low
Private equity markets are relatively well developed
Croatia’s financial regulations enable relative transparency but need to better address terrorist financing and money laundering risks
Croatia’s insolvency framework leaves room for improvement
The domestic stock market’s capitalisation is low
State-owned enterprises play a significant role in some sectors
Public ownership is associated with weaker financial performance
Delivery of public services could be improved, such as in waste management
Poverty has declined significantly
The structure of Croatia’s workforce in international comparison
Croatia can further raise employment rates of younger and older adults
Low fertility and net out-migration contribute to an ageing and declining population
The labour market could be more dynamic
The share of low-skilled jobs has grown over the past decade
Few adults participate in training, partly due to programmes’ cost and inflexibility
Croatia’s education needs to improve, especially in mathematics and sciences
A significant share of young people is neither employed or in education
Croatia’s spending to help people into work is comparable with peers and focused on job creation
Employment rates vary considerably across Croatia
Pensions rather than social transfers reduce inequality and poverty in Croatia
Guaranteed minimum income benefits are lower than in most OECD countries
Wages have been rising but are low relative to productivity
Croatia’s wage-setting is relatively decentralised
Employment protection laws are somewhat stricter than the OECD average, and many dismissal cases end up in court
Minimum wages are near other countries relative to incomes and high relative to productivity
Housing prices have been rising in Croatia
A large share of dwellings is unoccupied yet many households are overcrowded
Croatia can increase revenue from recurrent taxes on immovable property
In Croatia, ageing costs are moderate, while relatively low pensions reflect shorter working lives