Standard & Poor's stated on Friday that it has raised Croatia's 'BBB+' to 'A-', with its outlook positive, estimating that the country's reform progress has further deepened its integration with its European and global partners, resulting in broader institutional improvements.

Thus, ‘A’ signalises strong capacities for the fulfillment of financial obligations, with a certain degree of exposure to economic conditions and changes.

S&P Global Ratings says that Croatia’s rating has been boosted by positive economic indicators, fiscal consolidation, the successful implementation of the National Recovery and Resilience Plan (NRRP) and political stability.

The company believes that “the current period of political continuity, alongside the key policy anchors within Croatia’s National Recovery and Resilience Program (NRRP), could sustain reform momentum over the current legislative term.”

“The government continues to implement a comprehensive reform agenda aimed at reversing structural weaknesses that hamper economic competitiveness, as well as enhancing the efficiency of key institutions. We consider that the successful implementation of these reforms has the potential to unlock further economic and societal benefits, addressing the broader structural challenges of a declining population and sluggish productivity growth.”

S&P says that “tourism still drives Croatia’s economic growth” and it forecasts “that GDP will expand by an average of 3% a year over 2024-2027.”

“This will add to the strong rise in wealth over recent years and sustain steady income convergence with the eurozone average.”

Third-highest rate of growth within EU

During 2021–2023, the Croatian economy expanded by an annual average of 7.6%, the third-highest rate of growth within the EU, and more than double the EU average.

“The expansion allowed Croatia’s GDP per capita to reach 76% of the EU average in 2023, up from 70% in 2021. We forecast that Croatia’s GDP per capita will increase by 25% between 2023 and 2026, which should result in continued income convergence with more advanced eurozone peers.”

Stability of energy provision through diversification

Croatia has diversified its sources of energy and fuel supply over the past three years, notably following the establishment and ongoing expansion of the liquid natural gas (LNG) terminal on the island of Krk and increasing capacity to receive seaborne oil deliveries.

In addition to securing Croatia’s domestic energy needs, the S&P agency expects “the expansion of the Krk LNG terminal to open the door to higher energy exports, especially when the associated investments in pipeline connectivity to central Europe are completed in 2025.”

PM: Historic A level confirmation of Croatia’s great progress

Commenting on the decision of this American credit rating agency to upgrade Croatia’s rating, Prime Minister Andrej Plenković said on Friday evening that reaching this credit rating is the achievement of one of the key objectives in the agenda of his third cabinet.

Making such progress from non-investment level (BB+) to A- during five and a half years is a great headway for Croatia, and we can be proud. Its membership of the Schengen area and the eurozone as well as this latest credit rating places Croatia into the narrowest circle of countries, the premier said.

This is a very positive signal about Croatia being a safe country for all investors both local and foreign ones, he added.

Despite all crises, we have managed to make economic growth, manage public finances in a responsible manner and have investments together with the absorption of European funds in the last eight years, Plenković stated.

“Croatia is on the right track, and we remain committed to pursuing the policies aimed at improving the living standards of our citizens, as our priority,” said he.

Finance Minister Marko Primorac also expressed satisfaction with the outcome and the decision of S&P.

All that is the result of positive trends and our reform policies in many areas, he added.