Why is Croatia’s Construction Industry Not Growing, While Slovenia’s Grows by 76%?

Lauren Simmonds

Updated on:

While the construction sector in Croatia’s neighbour to the north flourishes, things here at home aren’t so inspiring…

As Poslovni Dnevnik/Suzana Varosanec writes on the 3rd of April, 2018, following the fall in the volume of construction works back during December 2017, in January 2018, relatively high growth of 6.8 percent was recorded annually.

Analysts from the Croatian Chamber of Commerce (HGK) say that this represents the highest growth recorded since back in December 2016, but that the reality of it all is much more modest. As we reported yesterday, provisional data from DSZ, with the growth dynamics pointing to a 12% increase in the volume of work on buildings and a 0.3% fall on other buildings, sheds light on the fact that these are merely the consequences of an extremely low base. In January 2017, a very low level of activity was reported (an annual decline of 2.2% followed by a further 7.7% decline in civil engineering works).

Additionally, the more modest growth in January is confirmed by a 0.9% increase in volume compared to what was recorded in the previous month. Stronger and more stable growth continues to hinder the already low volume of infrastructure projects, and the continuity of this year-on-year trend of decline has been spread over the last nine months. The absence of a sufficient number of new investments in civil engineering confirms the low share of new buildings (42%) and when it comes to the overall works on other buildings, the number is considerably lower than the share of new buildings (70%), as is shown in HGK’s analysis.

In somewhat stark contrast in the EU, there was exceptionally high activity growth recorded in the construction sector on an annual basis, not to mention the highest growth rates, speaking historically. European Union records show that overall construction activity has increased by more than 30%. Slovenia has seen promising growth of 76%, Hungary has seen 43.1% growth, Czech Republic has seen growth of 33.6% and Poland has seen a 31.8% increase, all of these countries were impacted by “the solid dynamics of economic growth and the use of European Union funds”.

Construction activity rose by 2.5% in eighteen other EU member states, while France is currently experiencing stagnation, and Spain and Great Britain are also experiencing a downhill trend.

Projections suggest that the Republic of Croatia will increase and stabilise the growth of construction sector activities under the influence of various implemented infrastructure projects, as well as through the means of the proper and efficient use of EU money, but the numerous problems plaguing the Croatian construction sector remain unresolved, the lack of an adequate workforce being among the most pressing and burdensome of them all.


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