CNB’s macroeconomic projections for Croatia – June 2024

Published: 7/6/2024

The Croatian National Bank expects Croatia's real GDP growth to accelerate to 3.3% in 2024, from 3.1% in 2023, while in the next two years growth could gradually slow down.[1] According to the first CBS estimates, real GDP grew by 1.0% in the first quarter compared to the fourth quarter 2023, with the main growth generators continuing to be service activities and construction, reflecting strong personal consumption amid steady growth in employment and real salaries, the intensification in investments, predominantly public as it seems, and favourable developments in tourism. The projected strengthening of economic activity in 2024 reflects the expected continuation of the personal consumption growth, supported by favourable labour market developments and an expansionary fiscal policy, as well as the growth of foreign demand and the recovery of goods exports and corporate investments. In 2025 and 2026, the growth of main GDP components is expected to be relatively balanced amid continued growth in foreign demand, favourable labour market developments and persistently high inflows of EU funds. However, economic growth might gradually slow down to the average rate of 2.7% on the back of expected improvement in the general government structural fiscal balance.

Risks surrounding real economic growth projection of the Croatian economy appear balanced. Due to the ongoing geopolitical tensions and their potential escalation, economic developments in the international environment as well as movements of the prices of raw materials and energy remain highly uncertain. Although favourable current domestic developments should persist, weak manufacturing and a strong fall in business confidence in industry at the beginning of the second quarter signal negative risks to goods exports. Moreover, the projected investment growth will largely depend on the ability of the public sector, as well as of the private sector, to effectively absorb EU funds. However, should geopolitical tensions de-escalate, foreign demand could exceed expectations and support goods exports. Favourable labour marked developments and a stronger wage growth might also spur greater personal consumption growth.

The projections for 2024 foresee a noticeable deceleration of the average annual consumer price inflation (to 3.8%, from 8.4% in 2023), and further slowdown to 2.6% in 2025 and 2.1% in 2026. The decline in inflation this year reflects several factors: the easing of imported pressures and the weak growth of producer prices, thanks to subdued prices of energy, food and other raw materials compared to the peaks registered in 2022 and the normalisation of supply chains, the restrictive monetary policy stance reflected in tight financing conditions, as well as favourable statistical base period effect. The deceleration of overall inflation primarily reflects a considerably lower core inflation (which excludes energy and food prices), and to a smaller extent a drop in food inflation, while the average annual inflation rate of energy prices might go up somewhat after energy prices stagnated last year. However, core inflation might remain elevated due to strong domestic and foreign demand, especially for travel services, a robust labour market and the sharp wage increase. Core inflation is expected to drop in 2025 and 2026 (although it might remain slightly above the overall inflation), as well as food inflation, while the inflation of energy prices might stabilise slightly above the 2024 forecast.

The risks surrounding the projected inflation path are still elevated, but generally balanced. Inflation could come in higher than projected on the back of a stronger growth of energy prices, food and other raw materials due to heightened geopolitical tensions or effects of climate-change. However, risks with respect to core inflation, especially the inflation of services prices, are tilted to the upside. The spill over of higher growth of nominal wages on the back of strong labour market to consumer prices, especially the prices of services, could be stronger and/or longer lasting than currently expected. Inflation might also outstrip projections if corporate profits fail to somewhat absorb the impact of the strong wage growth. In contrast, risks that could bring inflation below the projected path include weaker economic growth and, consequently, weaker demand, the stronger impact of monetary policy tightening and strogner spillover of subdued energy and other raw materials prices on consumer prices of goods and services.

Employment is expected to increase by 2% in 2024, while the ILO unemployment rate might fall to 5.8% of the labour force. As a result of the ongoing economic expansion, the employment growth somewhat accelerated at the beginning of 2024. Employment increase was also broadly based. Most employers continued to report worker shortages as the most important factor limiting production, which was to some extent mitigated by hiring foreign workers and pensioners. Strong employment contributed to a reduction in the registered unemployment rate, which totalled 5.6% in April. The growth of nominal and real wages slowed down in the first three months of 2024, after having increased considerably in 2023. However, the average wage jumped sharply in April 2024, primarily as a result of a comprehensive reform of the wage system in the government and public sectors. The wage growth in the rest of the economy also somewhat accelerated, but at a markedly slower pace.

Although the current and capital account surplus might increase slightly in 2024, in the absolute amount of EUR 0.1bn from the year before, due to strong growth of the nominal GDP its relative share might be reduced from 3.9% to 3.7% of GDP. Broken down by individual accounts, the growth in the absolute amount of the surplus reflects the expected continued further increase in exports of services, especially tourism. At the same time, foreign trade deficit might remain unchanged as further reduction in net import of energy products, due to lower prices in the global markets, might be fully offset by the widening of the deficit in the trade of other goods. In contrast to the trade in goods and services, secondary income and capital account balances might worsen from the year before amid the expected decline in the absorption of EU funds in 2024, which peaked over 2023, when withdrawals from the previous multiannual financial perspective ended. Further growth in revenues from compensation of persons temporarily employed in Croatia in line with the growth of the number of foreign workers could further worsen the balance.

The European Central Bank (ECB) published its projection for the euro area.

Table 1. Macroeconomic projections for the Croatia
(year-on-year change, unless otherwise indicated)

Download table (xls)


  1. In accordance with the deadlines set within the June 2024 projection process of the Eurosystem Member States and the ECB (June 2024 BMPE), the final date for sending the macroeconomic projections for Croatia to the ECB was May 22, whereby the data taken into account in the finalization of projections were published up to (including) 20 May 2024.


Macroeconomic projections

CNB’s macroeconomic projections for Croatia – June 2024


Overview of the CNB’s spring macroeconomic projections for Croatia – March 2024


Overview of the CNB’s autumn macroeconomic projections for Croatia September 2023