Croatia needs investments in innovation, the so-called "industry 4.0," energy efficiency, and reforms, in order to come out of the crisis, it was said on Tuesday at a conference discussing investments that could pull Croatia out of its economic crisis, organized by the national association of employers HUP.

HUP director general Damir Zoric said that employers “want the draft national recovery and resilience plan changed so that more funds are channeled into the real sector,” state agency Hina reported.

HUP chief economist, Iva Tomic, said that Croatia is “at the bottom of the EU in terms of GDP per capita, at 65 percent of the EU average in 2019,” adding that it would “have to grow faster than other countries if it wanted to reach 75 percent of the EU average.” Hina did not specify when this target would be met according to Tomic.

“That can be achieved by increasing commodity exports and private investment with a quick return,” she said.

“Croatia needs structural reforms and to stimulate production which generates higher added value,” Tomic said, adding that it was also necessary “to advance skills on the labour market and strengthen the efficacy of the public sector while reducing its share in the economy.”

Head of HUP, Mihael Furjan, said that in light of the “serious problems in the health system and its announced reform, it surprised him that health was not given more importance in the draft national recovery and resilience plan.”

“A better organization or work, education and smart investment in diagnostics can advance the system’s efficacy, as well as (health) prevention, which can significantly cut costs and improve treatment outcomes,” he said.

Hrvoje Veselko of HUP’s hospitality and tourism association said hospitality and tourism sectors are “currently hibernating,” having stopped all investments. “The national recovery and resilience plan could accelerate further investments,” he added.

Competitiveness should be boosted through technological and digital transformation

Martina Dalic, former economy minister who resigned in 2018 and who is now the CEO of the Podravka food company, said that “technological modernization and digitization are important subjects in the national recovery and resilience plan, important for increasing growth.”

“Technological modernization must be in focus for productivity growth because the deficit in that segment stops us from progressing in relation to other countries.”

The food and drugs industries can be vastly advanced through “Industry 4.0 principles,” Dalic said. She said the public sector could not do without the private sector and vice versa. “For strong economic growth, they should align so that the funds from the national recovery and resilience plan were best utilized,” she said.

Atlantic Group CEO Emil Tedeschi said he was not in favor of creating “a stereotypical division between the private and public sectors.”

“The problem is not only the government’s, or only about the national recovery and resilience plan, but much wider, as there is a lot of work to be done at the micro level, at companies,” he added. “One should see how ready the private sector actually is and how much it looks to the government for rescue,” he said.