Croatia's digital economy increased by 16 percent on average annually from 2019 to 2021, and by 2030 its value could reach 15 percent of GDP, with the ICT sector the main driver of that growth, the consulting company McKinsey said in a report released on Wednesday.

The McKinsey & Co consulting and research company conducted a survey called “Digital challengers on the new frontier,” which covered 10 countries in the Central and Eastern European (CEE) region (Croatia, Bulgaria, the Czech Republic, Latvia, Lithuania, Hungary, Poland, Romania, Slovakia and Slovenia).

One of the conclusions of the survey was that by 2030, Croatia could achieve an increase in the share of the digital economy in its GDP by around 6.5 percentage points, which would be the second largest increase among the countries in the region.

“By accelerating the development of digital economies, the CEE could achieve up to €206 billion of additional annual value by the end of the decade,” the company’s Croatian office said.

Labeling countries according to the development of their digital economy as “digital challengers” (including Croatia, along with most of the countries in the region), “digital leaders” (such as Belgium, Denmark, Estonia, Finland, Ireland and others) and the “big 5” (France, Italy, Germany, Spain and the UK), McKinsey assessed that Croatia could advance faster than the others as a “digital challenger.”

These evaluations are based not only on the annual growth of the digital economy of 16% in the last four years but also on the growth of digital trade of 28% annually, which has significantly developed more than goods trade, mostly due to tourism and online hotel and other accommodation reservations.

In addition to estimating that the share of the digital economy in GDP in Croatia could grow by approximately 6.5 percentage points by 2030, McKinsey & Co also believe that Croatia’s digital economy could grow at an average annual rate of about 12 percent by 2030.

‘ICT sector in Croatia is the most important for growth of digital economy’

Digital trade should be the main driver of growth of the digital economy in most CEE countries, but in Croatia that is expected to be the ICT sector, McKinsey underscored, adding that their survey also showed that the strong growth of the ICT industry, on average of almost 20 percent a year, can lead to an increase in the digital economy.

If the Croatian ICT sector grows by an average of 20 percent a year, by 2030 it will increase its value up to five times, to approximately €8 billion and become the main component of the digital economy in Croatia.

In this scenario, digital trade would also continue with a healthy annual growth of around 6% and would increase its value to approximately €5 billion by 2030.

“Compared to the conclusions from our previous survey just two years ago, where it seemed that Croatia’s digital economy was at a standstill and that the state was insufficiently participating in exploiting the available potential, the growth shown by the Croatian digital economy at the moment seems encouraging. It is comparable with global trends when the Covid pandemic more or less stimulated the growth of digital trade in the region, especially strong growth of the ICT sector, and further investments in the field of the digital economy are expected,” the director of the Adriatic region and partner at McKinsey & Co, Tomislav Brezinscak, said.