On Tuesday, the Foreign Investors Council Croatia presented the White Book 2024 "Croatia's competitiveness after the completion of the European integration process: a new chapter". It cites labour shortages, an education system that is not adapted to the economy and inefficient bureaucracy as the main problems.

The White Book contains an overview of the investment climate in Croatia and recommendations on how to improve the business environment and attract foreign investors.

Foreign investors are of great importance to Croatia, said Finance Minister Marko Primorac at the presentation. They employ 50% of all workers, generate 60% of all profits and 62% of all investments, he added.

Croatian economy and labour market have remained stable

Since February 2020, Croatia is the only country in the world whose credit rating has been raised by two points by the three most important agencies, the minister said.

The latest issue of treasury bonds was successful. The state had planned to issue 550 million euros, but interest exceeded all expectations, so the total amount subscribed exceeded 900 million euros.

The issue of retail bonds in March 2023, the T-bills last November and the recent T-bills raised over 3.3 billion euros in payments from citizens, Primorac said, adding that over 110,000 citizens participated in the transactions.

Despite the COVID crisis, the two earthquakes in 2020, the Russian invasion of Ukraine and the energy crisis, the Croatian economy and labour market have remained stable, the number of people employed is record-breaking, while unemployment is at 6.5%, as in the eurozone, the minister said.

He was pleased that GDP increased by 4.3% in the last quarter of 2023 compared to the previous year and that this was the highest growth in the EU according to available data.

Labour shortages, obsolete education system and slow bureaucracy

Croatia needs policies that improve the business environment and attract business investment that increase productivity and competitiveness, said Burak Baykan, President of the Foreign Investors Council Croatia.

“Based on our business experience in Croatia and other countries, we firmly believe that Croatia can become one of the most attractive investment destinations in the foreseeable future,” he said.

It is obvious that Croatia is working on its financial discipline and improving its creditworthiness. Over time, EU funds will become less and less important, while foreign investment will become more and more important, he added.

Unfortunately, Croatia is not on par with other EU states when it comes to attracting foreign investment, he said, adding that the main problems are labour shortages, the need to renew the education system and slow bureaucracy.

Croatia still lagging behind

Labour shortage is one of the biggest obstacles to development, and the education system is not adapted to an economy that can create high added value, said the association’s secretary general, Tomislav Slat. Croatia needs a big step forward in regulation and the efficiency of public administration, he added.

Despite the completion of the European integration process, Croatia still lagging behind other small, open and more developed European states, said economic analyst Velimir Sonje, author of the White Book 2024.

Croatia needs a new, ambitious national development target to reach 90 per cent of the average real per capita income in the EU, he said, adding that for this to happen, Croatia must be among the 25 most desirable investment destinations in the world by the end of this decade and receive an A+ credit rating.