Publication: Country Partnership Framework for Croatia for the Period FY25-FY30
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2025-06-18
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2025-06-18
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Over the past decade, Croatia has demonstrated significant progress in economic development and improvement in living standards for its citizens. Economic performance during this period, including the country’s strong recovery following its pandemic-induced recession, was underpinned by sound economic management and notable reforms. Growth benefited significantly from the tourism sector rebound, which accounted for 19 percent of gross domestic product (GDP) in 2024. In addition, significant inflows of European Union (EU) funds during 2020-24, cumulatively totaling around 19 percent of 2023 GDP, helped boost public investment and economic growth. Croatia’s growth has contributed to substantial progress in living standards, with GDP per capita in purchasing power parity (PPP) terms increasing from 60.7 percent of the average EU27 level in 2015 to 76.8 percent in 2024. However, in order to sustain strong growth and progress on shared prosperity and poverty reduction, Croatia needs to tackle several fundamental challenges. First, Croatia needs to increase the overall productivity of its economy by boosting private sector investment, promoting diversification of the economy toward higher value-added sectors, and addressing remaining business environment challenges that reduce dynamism in the market. Second, Croatia needs to contend with demographic challenges that are contributing to shortages of labor with the skills required to sustain growth. Third, as a country with rich environmental endowments that also underpin its large tourism sector, Croatia needs to decouple its growth from environmental pressures associated with water use and air pollution and manage its significant exposure to extreme weather risks. This will require better management of natural resources, reducing pollution, and mitigating environmental and climate risks. Croatia also needs to increase energy efficiency and expand renewable energy sources to reduce risks associated with global energy price volatility and improve economic performance in key sectors. Finally, despite recent progress, further strengthening of institutions is needed to sustain economic and social development and enable Croatia to tackle its development challenges effectively. The FY25-FY30 CPF will have a strong knowledge focus and will further strengthen Croatia’s contribution to the global development agenda.
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“World Bank; International Finance Corporation; Multilateral Investment Guarantee Agency. 2025. Country Partnership Framework for Croatia for the Period FY25-FY30. © World Bank. http://hdl.handle.net/10986/43350 License: CC BY-NC 3.0 IGO.”
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