• The current and capital account balance stood at EUR –0.47bn in the fourth quarter of 2023, having improved considerably from EUR –1.10bn in the same quarter of the year before.
• The financial account of the balance of payments recorded a negative balance of EUR 0.87bn (net capital inflow) in the fourth quarter of 2023, down from EUR –1.13bn in the same quarter of the previous year.
• The net international investment position at the end of the fourth quarter of 2023 stood at EUR –16.71bn or 22.0% of GDP.
• Gross external debt stood at EUR 64.0bn or 84.4% of GDP at the end of the fourth quarter of 2023.

The current and capital account of the balance of payments (Figure 1) ran a deficit of EUR 0.47bn in the fourth quarter of 2023, having improved by EUR 0.63bn from the same period of the year before. The improvement was mostly due to a more favourable balance in the goods sub-account, which improved by EUR 0.77bn from the same quarter of the year before, mostly owing to a steep fall in imports of EUR 1.15bn. The balances in the services and secondary income account^[1] have not changed much, while the primary income balance deteriorated by EUR 0.2bn mostly owing to increased expenditures associated with direct investments (reinvested earnings) and smaller increases in expenditures on other investments and employee compensations. The services sub-account recorded a significant increase in tourist revenues throughout 2023, having risen from EUR 13.11bn in 2022 to EUR 14.60bn in 2023, which is an increase of EUR 1.49bn or 11.32%. The balance in capital transactions remained positive and worsened somewhat (EUR 0.05bn) from the same quarter of the year before.

Figure 1 Balance of payments current and capital account

¹ Sum of the last four quarters
Source: CNB.

The net capital inflow (negative difference between total assets acquired and total liabilities assumed) in the financial account (Figure 2) stood at EUR 0.87bn in fourth quarter of 2023, having fallen by EUR 0.26bn from the same period of the year before. The net capital inflow recorded was largely due to a large net inflow in the other investment account (EUR 1.3bn). At the same time, international reserves rose slightly, which, after Croatia’s entry into the euro area, mainly refer to the dollar portfolio managed by the Croatian National Bank. The net outflow in the direct investment sub-account stood at EUR 0.15bn, mainly owing to a negligible increase in liabilities (capital inflow) of only EUR 0.8bn. And lastly, the portfolio investment sub-account recorded a net capital outflow of EUR 0.37bn.

Figure 2 Balance of payments ̶ financial account

¹ Sum of the last four quarters.
Source: CNB.

If the last four quarters are observed (Table 1), the cumulative balance in the current and capital account until the end of 2023 stood at EUR 3.01bn or 4.0% of GDP while that for the whole of 2022 stood at EUR 226m or 0.3% of GDP. In 2023, the financial account recorded a net outflow of EUR 1.21bn or 1.6% of GDP, in contrast with a net inflow of EUR 1.05bn or 1.4% of GDP recorded in 2022.

Table 1 Balance of payments

* Sum of the last four quarters.

Note: Positive net values for individual financial account components in Table 1 and Figure 2 indicate that transactions by which foreign assets are acquired are larger than the transactions by which foreign liabilities are assumed for a given financial account component over a given period or denote net capital outflow abroad. Negative values indicate that the transactions by which foreign assets are acquired are smaller than the transactions by which foreign liabilities are assumed for a given financial account component over a given period or denote net capital inflow from abroad.
Source: CNB.

The net international investment position (Figure 3) stood at EUR –16.71bn at the end of 2023 (Figure 3), recording a small increase in the negative balance of EUR 0.02bn from the end of September 2023. The relative indicator of the net international investment position improved slightly from –22.4% of GDP at the end of September 2023 to –22.0% of GDP.

Figure 3 International investment position

Note: The international investment position (net) equals the difference between domestic sectors' foreign assets and liabilities at the end of a period. The negative value of the net international investment position indicates that foreign liabilities of Croatian residents are greater than their foreign assets. Included are assets and liabilities based on debt instruments, equity investments, financial derivatives, and other instruments.
Source: CNB.

Considering the share of the international investment position in GDP according to investment type (Figure 4), the share of net debt investment in GDP improved at the end of the year from –2.3% to 3.5% from September while the share of net equity investment worsened slightly from –25.3% to –25.4%.

Figure 4 Share of international investment position in GDP by type of investment

At the end of 2023, gross external debt (Figure 5) stood at EUR 64.0bn or 84.4% of GDP , having risen by 1.5bn or 0.4 percentage points of GDP from the end of September 2023. Gross external debt, which excludes the CNB (69.1% of the total gross external debt) fell by EUR 2.2bn from September, or by 4.0 percentage points if the share of debt in GDP is observed. The general government made a relatively modest contribution to the growth in gross external debt (EUR 0.4bn) while all other sectors recorded a fall in foreign borrowing.

Figure 5 Stock of gross external debt ^[2]

Detailed balance of payments data
Detailed outstanding gross external debt data
Detailed data on the international investment position

1. Primary income consists of employee compensations and investment income (retained earnings, dividends, interest). Secondary income refers to current transfers (workers’ remittances, pensions, gifts and grants, taxes and contributions, flows of funds as part of international cooperation). ↑

2. After the Republic of Croatia joined the euro area, gross external debt increased by the amount of liabilities associated with the allocation of the euro banknotes within the Eurosystem. This amount is the difference between the amount of banknotes in circulation, the allocation to which the CNB is entitled according to the ECB’s key, and actually issued banknotes in circulation. In addition, this amount of liabilities is reduced by the estimated amount of euro banknotes in circulation in the Republic of Croatia that are issued under the ECB’s key of other euro area countries. Only the amount of the difference between the amount of banknotes in circulation, the allocation to which the CNB is entitled according to the ECB’s key, and the actually issued banknotes in circulation is recorded on the foreign claims side, so that the effect on the balance of net external debt is favourable since the balance of assets is larger than the balance of liabilities. ↑