Croatia: country overview

15 August 2012
by Ina Dimireva -- last modified 30 January 2017

Croatia became the 28th EU country on 1 July 2013, having applied in 2003 and begun negotiations in 2005. The target is now further integration – Croatia will change the kuna for the euro as soon as its economy meets the criteria – on inflation, public finances, exchange-rate stability and interest rates. The most important sectors of Croatia’s economy in 2015 were wholesale and retail trade, transport, accommodation and food services (21.8 %), industry (21.2 %) and public administration, defence, education, human health and social work activities (15.2 %). Croatia's main export partners are Italy, Slovenia and Germany, while its main import partners are Germany, Italy and Slovenia.

Capital: Zagreb

Geographical size: 56 594 km2

Population: 4 225 316 (2015)

Population as % of total EU: 0.8 % (2015)

Gross domestic product (GDP): € 43.897 billion (2015)

Official EU language(s): Croatian

Political system: parliamentary republic

EU member country since: 1 July 2013

Seats in the European Parliament: 11

Currency: Croatian Kuna HRK

Schengen area member? No, Croatia is not a member of the Schengen Area.

Presidency of the Council: Croatia will hold the revolving presidency of the Council of the EU for the first time in the first half of 2020.

Country overview

Croatia borders Bosnia and Herzegovina, Hungary, Montenegro, Serbia and Slovenia. It has been an independent country since 1991. For over 70 years before that, it was part of the former Yugoslavia.

History

The duchy of Croatia first appeared in the 8th century, becoming a kingdom 200 years later. It was heavily influenced by neighbouring Austria and Hungary in the following decades, while the 15th to 17th centuries saw frequent clashes with the Ottoman Empire.

Flag

The three colours of the Croatian flag represent Croatia's three constituent states: the Kingdom of Croatia (red and white), the Kingdom of Slavonia (white and blue) and the Kingdom of Dalmatia (red and blue).

Parliamentary democracy

Croatia is a parliamentary democracy. Power is divided between: the elected parliament (legislative), the government and elected president (executive) and autonomous courts (judicial).

Geography

Much of Croatia is lowland. Its mountains and in particular its beaches attract many visitors. Croatia also has 1,246 islands and islets, of which just 48 are permanently inhabited.

Croatia and the EU

Croatia became the 28th EU country on 1 July 2013, having applied in 2003 and begun negotiations in 2005. The target is now further integration – Croatia is expected to join the Schengen area by 2015, and will also change the kuna for the euro as soon as its economy meets the criteria – on inflation, public finances, exchange-rate stability and interest rates.

Like other EU countries, Croatia must implement laws agreed at EU level, such as laws on food safety, recognition of other countries' professional qualifications or limits on how much mobile phone users can be charged for calls from abroad.

For some laws, transition periods have been agreed for Croatia. For example, Croatia will keep lower excise rates for cigarettes until the end of 2017, and fishermen can continue using nets outlawed in the rest of the EU until June 2014.

Economy Overview

Though still one of the wealthiest of the former Yugoslav republics, Croatia's economy suffered badly during the 1991-95 war. The country's output during that time collapsed, and Croatia missed the early waves of investment in Central and Eastern Europe that followed the fall of the Berlin Wall. Between 2000 and 2007, however, Croatia's economic fortunes began to improve with moderate but steady GDP growth between 4% and 6% led by a rebound in tourism and credit-driven consumer spending. Inflation over the same period remained tame and the currency, the kuna, stable.

Croatia experienced an abrupt slowdown in the economy in 2008 and has yet to recover; economic growth was stagnant or negative in each year since 2009. Difficult problems still remain including a stubbornly high unemployment rate, uneven regional development, and a challenging investment climate. Croatia continues to face reduced foreign investment.

On 1 July 2013, Croatia joined the EU, following a decade-long application process. Croatia will be a member of the European Exchange Rate Mechanism until it meets the criteria for joining the Economic and Monetary Union and adopts the euro as its currency. EU accession has increased pressure on the government to reduce Croatia's relatively high public debt, which triggered the EU's excessive deficit procedure for fiscal consolidation. Zagreb has cut spending since 2012, and the government also raised additional revenues through more stringent tax collection and by raising the value-added tax. The government has also sought to accelerate privatization of non-strategic assets, with mixed success.

Source: Europa, The World Factbook