March the 16th, 2025 – After having achieved the most rapid growth in the entire Eurozone in 2024, 2025 Croatian economic slowdown is looming.
As Poslovni Dnevnik writes, a 2025 Croatian economic slowdown is on the horizon following rapid growth last year, with the real GDP rate threatening to fall to three percent. That is primarily due to a combination of recent retail chain boycotts that are weakening personal consumption, typical Croatian economic patterns, and high prices in tourism. The storm clouds looming over global geopolitics also play a significant role.
As the Croatian National Bank (CNB) noted in its spring macroeconomic projections, domestic demand will continue to support growth, but that will be less than last year. At the same time, the beginning of 2025 could be stagnant, mainly due to the retail chain boycotts in January and February. “Such developments should be temporary,” CNB analysts pointed out, adding that personal consumption will likely strengthen, but ultimately growth could still be weaker than last year.
It can now be said with some certainty that the effect of civic activism and boycotts due to frustration with high prices, regardless of criticism of its overly broad and occasionally unclear direction, will still be felt when drawing a line under the performance of the domestic economy. On the other hand, it remains open whether it has achieved the desired results of pressure on retail prices and what this will mean for (possible) new boycotts. After three years of double-digit averages, investment growth could also slow down. It will likely still remain solid, however, albeit in the context of strengthening the contribution of EU funds and improving financing conditions.
At the same time, spiralling high prices in tourism have clearly begun to have their effect on Croatia’s economic picture. Although the CNB forecasts a strengthening of external demand and a further recovery in exports of goods and services, in the services segment (where tourism is recorded) growth should be “relatively mild given the high level of tourist services and the deterioration of price competitiveness”. “The recovery of price competitiveness will be an important prerequisite for continued revenue growth”, it has been emphasised.
“Risks related to real GDP growth appear to be slightly negative, this is primarily related to pronounced geopolitical tensions. On the other hand, an increase in military spending at the EU level for the purpose of strengthening security could have a positive impact on Croatian economic growth,” they noted.
Unlike growth, which has been corrected downwards compared to the previous projections from December, inflation is still expected to be somewhat higher (by 0.2 points), but with a tendency to slow down. Inflation measured by the harmonised index (HIPC), which allows comparisons with the rest of the Eurozone, will slow down to 3.7 percent in 2025. That is a drop from 4 percent last year),with a further decline to 2.6 percent forecast for 2026.
After accelerating inflation at the end of last year and the beginning of this year, driven by a wide range of food, services and energy prices, a 2025 Croatian economic slowdown seems to be likely. In particular, core inflation, which excludes energy, food, alcohol and tobacco prices, could decline (to 3.2% from 4.8%) due to weaker demand.
However, the average annual rate of energy price inflation could accelerate significantly in 2025 due to increases in the administrative prices of gas, electricity and heat at the end of last year and the beginning of this year. Although the CNB considers the risks to the inflation calculation to be balanced, they remain highlighted. Geopolitical tensions could force prices upwards, all under the influence of almost daily decisions from across the pond. The often bizarre decisions being made in the White House are spilling over into a trade war on a global level to which Croatia isn’t immune.
