Croatia has a modern economy, where the service and service industries employ about 65 percent of the country’s workforce. During the 1990s, tourism has again emerged as an important part of the country’s economy and now accounts for about 40 percent of export earnings. In the years 2000–07, Croatia saw GDP growth of 4–6 percent, but the international financial crisis in 2008 hit the country hard. This was mainly a result of the country’s large external dependence, high external debt (almost 100 percent of GDP) and the large deficits in the state budget. 2011 was the first year after the financial crisis when Croatia again showed GDP growth. The country also has problems with some older and state-owned industries, mainly in the shipbuilding sector.
After World War II, Croatia has evolved from an agrarian state of modest industry to a partially modern industrial state. Most of the arable land has remained in private hands, but on the large and fertile plains, cooperative and agro-industrial complexes were created. In the 1960s and 1970s, an unsuccessful transition to so-called self-management companies took place in the industrial sector. A negative economy in all areas led to unemployment and falling living standards in the 1980s.
The war in former Yugoslavia hit the country’s economy hard. The previously important tourism industry, which in 1989 was estimated to contribute 82 percent of GDP, was the sector most affected by the business sector. Industry and infrastructure were also hit hard; an estimated one third of all factories were destroyed. In order to curb hyperinflation, in 1993 a tightening package was introduced, and in 1994 a new currency was introduced, measures that to some extent had the desired effects. Between 1985 and 1993, GDP fell by an average of 10 percent per year, but in 1993-98 the economy recovered, but in 1999 the country was hit hard again, this time by the financial crisis in the Russian Federation.
The importance of agriculture to Croatia’s economy has dropped significantly after the Second World War, despite the fact that increased mechanization and more efficient cultivation methods have tripled agricultural production. Agriculture, like other parts of Croatia’s economy, was affected by the Yugoslav wars; In 1991-92 production value fell by 25 percent, and large areas were destroyed. It was not until 1996 that a recovery was evident.
Most of the agricultural land is privately owned and the number of small farms is large. Croatia’s most important agricultural areas are located in the eastern part of the country as well as in Istria. Mainly maize, wheat and sugar beet are grown, but wine and citrus fruits are grown on the Adriatic coast.
About 40 percent of Croatia’s land area is covered by forest and forestry is an important industry. The forest area has increased during the post-war period due to the closure of many small farms. The Croatian oak, which is used for furniture, is in demand in the world market.
Raw material resources and energy supply
Raw material production is very moderate in Croatia and the country relies for its energy supply almost entirely on imports, mainly from oil and natural gas (2010). Domestic petroleum production is marginal; the most important fields are in the Moslavina area southeast of Zagreb and in the northeast corner of Croatia. Industrial minerals are to some extent mined and until 1997 coal and lignite were also mined.
Together with natural gas, oil is the most important source of energy. In the case of renewable energy sources, which make up about 12 percent (2009) of total production, hydropower is dominant. The goal is for the share of renewable energy sources to reach 20 percent by 2020. The country also receives electricity from the Slovenian-owned nuclear power plant in Krsko.
According to Countryaah, Croatia’s most important industrial industries are the food, metal and shipbuilding and chemical industries. The largest industrial concentration can be found in Zagreb, including the engineering and pharmaceutical industries and the electronic industry. The engineering industry is also found in the shipyards Split, Rijeka and Pula as well as Slavonski Brod. The metallurgical industry is represented by iron and steel plants in Sisak and aluminum plants in Šibenik. The petrochemical industry is found in, among other things, the oil district in Moslavina and in Rijeka, Sisak and Slavonski Brod (refinery).
In the former Yugoslavia, western Croatia together with Slovenia formed a northern industrial region with a relatively well differentiated industry, including engineering industry, metallurgical and chemical industry and forestry industry. Industrial traditions and an expanded infrastructure were the most important prerequisites. In the 1950s and 1970s, a number of scattered industrial centers in the coastal area and the Savadal Valley were also developed.
Croatia had a clear focus on the metallurgical and petrochemical sectors and the engineering industry; however, industrial development was hampered by an increasingly poor economy. During the Yugoslav wars, industrial production fell by an average of 15 percent per year, and it was only in the mid-00s that the industry recovered. However, the industry still suffers from structural problems with old factories.