- Business Relationships
- Foreign direct investment
- FTAs and Treaties
- Development Cooperation
- Prospective fields of study (MOP)
Trade relations with the EU
Trade with the EU is essential for Croatia, trade relations with EU countries represent almost 70% of the total Croatian trade. In 2021, Croatia exported goods worth EUR 1 billion to the EU (almost a third more than in 2020), the value of imported goods from the EU increased by 19.6% to EUR 2 billion. Croatia traditionally has a negative trade balance with EU countries, for 2021 the balance was -8.4 billion EUR. The table below shows data from Croatia’s perspective.
- Allcountrylist: Overview of major industries in Croatia, including mining, construction, transportation, tourism, and foreign trade.
|Exports from the EU to HR (million EUR)||16,819.6||18,261.4||19,804.3||18,093.8||21,650.6|
|Import to the EU from HR (million EUR)||8,881.2||9,782.7||10 154.9||10 115.7||13,222.3|
|HR balance with the EU (million EUR)||-7,938.4||-8,478.6||-9,649.5||-7,978.2||-8,428.3|
Source: European Commission, DZS
Trade relations with the Czech Republic
The year 2021 was very significant for Czech exports to Croatia, reaching 17.1 billion CZK, which is the highest recorded value in history. Croatia’s foreign trade balance for 2021 recorded the highest value in modern history (-1billion CZK).
|Exports from the Czech Republic to HR (billion CZK)||5.4||15.6||15.9||15.8||17.1|
|Imports to the Czech Republic from JHR (billion CZK)||14||5.7||5.1||5.5||5.2|
|Croatia’s balance with the Czech Republic (CZK billion)||8.3||-9.9||-10.7||-10.3||-11.9|
Trade relations with countries outside the EU
As for non-EU countries, trade in goods with third countries last year accounted for about 30% of total exports. Croatia also has a negative trade balance with countries outside the EU. Last year, Croatia recorded a negative trade balance of EUR 148.1 million, which is less than in 2020, when it was -228.4 million EUR. Croatia exports the most to neighboring Bosnia and Herzegovina (9%) and to Serbia (5%). In the case of imports, Croatia’s biggest partner is China (5%) and Bosnia and Herzegovina (3%). Exports from countries outside the EU have a growing tendency, only in covid 2020 did exports and imports from countries outside the EU fall below the threshold of EUR 5 billion.
|Export from non-EU countries to HR (million EUR)||4,541.7||4,967.7||5 195.1||4,906.9||6,032.1|
|Import to non-EU countries from HR (million EUR)||4 137.5||5,593.2||3,965.7||4,066.3||5,884.0|
|HR balance with non-EU countries (million EUR)||-404.2||767.5||-367.2||-228.4||-148.1|
Source: EIU, Eurostat, DZS
Foreign direct investment
According to Croatian statistics, total FDI in 2021 amounted to EUR billion. The main investors are traditionally from the Netherlands, Austria, Italy and Germany. While trying to encourage foreign investors, Croatia still has a relatively bad reputation for corruption, a shrinking workforce, high taxes and an imperfect and slow legal system. On the contrary, the main advantages include developed infrastructure, high potential of the tourism sector, an educated workforce and a strategic location. As for Czech FDI, they are on the rise, representing several hundred million EUR annually. Among the largest investments is the five-star hotel on the Adriatic coast Hilton Rijeka Costabella Beach Resort & Spa owned by JTH Holding, as J. Třešňák (CZK billion). The hotel has a capacity of more than 500 beds with a sea view. Đuro Đaković in Slavonské Brod. Investments in power plants burning biomass in Gospić, Županija and Benkovac are also important (GEEN Holding’s investment in three power plants reached EUR 120 million). Signum Group completed one of the largest Croatian water parks Aquacolors in Poreč (EUR 25 million), J&T owns Vaba Banka since 2013. In 2016, Kofola bought mineral water producer Studenac from Croatia’s Podravka, and Sazka bought Super Sport, one of the largest Croatian betting companies, in 2018. Agrofert owns 70% of the shares in the Croatian food company Agronom in Požega, Slavonia.
FTAs and treaties
Croatia has been a member of the EU since July 2013. The free movement of persons, goods, services and capital applies within its territory. Croatia is still not a member of the Schengen area, therefore passport controls are still taking place at the borders with EU member states (for Czech citizens, these are mainly controls at the borders of Croatia with Slovenia and Hungary). Croatia is eminently interested in joining the Schengen area, it believes that it will join in 2022 during the Czech presidency. Croatia is not a member of the Eurozone, but it meets the criteria of the ERM II Exchange Rate Mechanism and plans to introduce the euro from 2023. It is a member of the WTO and is conducting accession negotiations for membership in the OECD.
As for the agreements with the Czech Republic, there are 24 agreements in force that entered into force before 1989 (succession) and 43 bilateral agreements and protocols on cooperation concluded after the creation of the Czech Republic in 1993. These are agreements in the fields of economy, culture, education, migration of persons. A complete list is available on the website of the Ministry of Foreign and European Affairs of Croatia (www.mvep.gov.hr). In the economic and tourist areas, mutual trade between the Czech Republic and Croatia is governed by the rules of the EU single market. Among the most important are the following documents: Memorandum on cooperation between the MPA of the Czech Republic and the Ministry of Economy, Labor and Entrepreneurship of the Republic of Croatia (entered into force on 6 September 2005), Agreement between the Government of the Czech Republic and the Government of the Republic of Croatia on cooperation in the field of tourism (entered into force 27/06/2007), Protocol to the Agreement on the Promotion and Protection of Investments (entered into force in August 2009), Protocol to the Treaty between the Czech Republic and Croatia on the Avoidance of Double Taxation (entered into force in July 2012). In the field of foreign trade, Croatia concluded FTAs with North Macedonia (1997), Bosnia and Herzegovina (2001), Switzerland (2002), Liechtenstein (2002), Norway (2002), Iceland (2002), Turkey (2003), Albania (2003), Serbia, Montenegro (in 2004) and Moldova (2004).
The total ODA provided by Croatia in 2021 was HRK 480 million. Croatia maintained the continuity of year-on-year growth in development aid funding, with this growth reaching 6% even in the pre-Covid 2019 year and reaching 0.13% in relation to GDP. Most of the funds were transferred to the EU budget for development cooperation and to the mandatory contribution to the EU Development Fund, which totaled HRK 7million. Most of these funds were directed to development cooperation (amount of HRK 456 million, i.e. 94%). The remaining HRK 25 million, i.e. approx. 5%, went to humanitarian aid. Bilateral official development assistance programs and projects were financed in the amount of HRK 131 million (27%) in 2021. A total of 450 projects were implemented. The majority was implemented in three priority countries: Bosnia and Herzegovina, Ukraine and Jordan. The aid was primarily focused on the first sectoral priority of the national strategy – ensuring the dignity of every individual by investing in education and health care. A total of 199 projects worth HRK 89 million were implemented in Bosnia and Herzegovina. It is generally based on the National Development Strategy of the Republic of Croatia until 2030, where the priorities are the development of science and technology, education, health, economic development and security.
Prospective fields of study (MOP)
Perspective field 1
Railway industry and rail transport
The priority sector is based on the National Development Strategy of Croatia until 2030. For the modernization of existing railway lines and the construction of new lines, the Croatian government expects investments of up to 110 billion CZK (revitalization of 750 km of railways). There are opportunities for Czech companies in the field of reconstruction, modernization and construction of new railway sections, railway lines, stations, traction lines, railway bridges and tunnels, replacement of automated switches, extension of platforms with non-level access, security equipment and in the area of ensuring the safety of railway crossings. The Croatian railway network currently represents 2,617 km of railways, of which only 10.5% are double-track and 37.5% are electrified. HŽI’s investment plan until 2025 amounts to CZK 47 billion, of which almost 75% of the investments are for projects co-financed from the European Structural Funds (other projects amounting to CZK 1billion will be financed from other sources). From 2025 to 2030, HŽI plans to invest more than CZK 6billion in new projects.
Perspective field 2
The new National Energy Strategy of Croatia until 2030 with a view to 2050 envisages ambitious plans for the development of the construction of renewable energy sources and a gradual transition to a green economy. It expects annual investments of CZK 4billion. It is about the introduction of renewable energy sources, the development of wind and solar power plants and investments in the infrastructure of “Smart Cities”. Croatia meets the goals of the Paris Agreement on climate change, by 2030 it wants to reduce greenhouse gas emissions by 40%, increase energy efficiency by at least 32.5% and increase the share of renewable sources by at least 32%. The Renewable Energy Association considers wind and solar energy to be the key to solving growing energy needs (potential of up to 9,000 MW of wind energy, 8,000 MW of solar and 20,000 MW from other renewable sources). The state energy company HEP has drawn up plans for the construction of 6 solar power plants with a total capacity of 25 MW and a value of CZK 493 million. EUR. Part of the more than CZK 98.6 billion available from the European Regional Development Fund can be used to develop this segment.
Perspective field 3
Water management and waste industry
The area of water management and the waste industry was previously relatively neglected, and it has been very underfunded for a long time (now only less than half of the country’s population is connected to sewage, losses from drinking water in water mains still routinely reach up to 80%). Modernization is necessary, the necessary investments until 2030 are estimated at almost CZK 17billion. Opportunities exist in the construction of wastewater treatment plants (not only in sparsely populated areas of the country), in the supply of water distribution systems, environmental technologies, in the construction of composting plants and lines for the processing of biodegradable waste and equipment for the processing of industrial waste from sludge and wastewater. According to the Hrvatske vode agency, 35 projects are ready, which should be implemented by the end of 2023 (for more than 10 billion CZK).
Perspective field 4
Healthcare and pharmaceutical industry
The majority of Croatian healthcare facilities need overall modernization, investments in complete modern equipment and facilities for hospitals and emergency services are necessary. Opportunities also exist in the construction of new modern hospitals, health-recreational centers, resorts and recently also wellness tourist facilities. Strengthening the resilience of the health system can also be included among the new projects (the planned investment value is CZK 8.5 billion). There are opportunities for supplying individual specialized departments of hospitals with the necessary medical devices and equipment (eye clinics, gynecology-obstetrics, dental, cosmetic and surgical laboratories). There is a lack of protective clothing, transport and isolation equipment, decontamination systems (showers, tents), quality medical beds. The creation of new health and recreation centers and rehabilitation workplaces directly in hotels is being promoted. It is related to the government’s effort to extend the tourist season from a few summer months to essentially the whole year and thus respond to the demand for these services from the elderly. In addition to the export of classic and special medicines, cooperation in the field of research, development and testing of medicines is promising. There is also interest in the development of balneological facilities and cooperation in the field of spas in general.
Perspective field 5
Agricultural and food industry
There are new opportunities in the digitalization of agriculture. A generational change of farmers is also taking place in Croatia, which brings with it the use and implementation of the most modern technologies, innovations and digital solutions. Connecting with modern technology, innovation and creativity is a must. Deliveries of agricultural machinery, tractors, agricultural technologies and engineering products are also current. As part of the Strategic Plan of the common agricultural policy for the period 2023 – 2027, Croatian farmers will have CZK 88.8 billion at their disposal. A return to proven management practices, smaller fields, less chemical fertilizers and spraying, and lighter agricultural technology are very important for today’s agriculture, but we cannot ignore new technologies and procedures that contribute to strengthening the competitiveness and precision of agriculture. There are chances for supply to private label chains or subcontracting to the manufacturing industry. Among the specific opportunities, it is possible to mention the supply of milk and cream due to certain limited capacities of Croatian dairy plants. There are also export opportunities in organic foods (e.g. muesli, cereals) and in general in the range of healthy food, which is starting to gain popularity here. Suppliers of fertilizers and agricultural machinery, which can be used in agricultural production, can also apply on the Croatian market. cereals) and in general in the assortment of healthy food, which is starting to gain more and more popularity here. Suppliers of fertilizers and agricultural machinery, which can be used in agricultural production, can also apply on the Croatian market. cereals) and in general in the assortment of healthy food, which is starting to gain more and more popularity here. Suppliers of fertilizers and agricultural machinery, which can be used in agricultural production, can also apply on the Croatian market.
Perspective field 6
These are primarily investments in tourism, real estate and tourism development. Tourism accounts for almost 25% of the country’s GDP. Opportunities exist in the area of modernization and reconstruction of existing hotels and accommodation networks, as well as in the area of construction of new hotels and resorts, including their complete equipment. There are new opportunities in the field of wellness projects, which subsequently also includes opportunities in other similar sectors. The Ministry of Tourism and Sports supports a program of state support in tourism and sports during the COVID-19 pandemic worth almost CZK 5 billion (the aim is to ensure access to liquidity financing for both small and medium-sized enterprises and large companies). In the National Development Strategy, the development of health tourism and its connection with “green” cities is also mentioned among the priorities. Croatia supports the creation of new health and recreation centers and rehabilitation workplaces directly in hotels. It is related to the government’s efforts to extend the tourist season from a few summer months to the whole year and also to respond to the demand for these services from senior citizens.