Economic growth accelerates in the fourth quarter of 2025

Q4 reading the strongest in a year: Croatia's GDP grew 3.6% on a year-on-year basis in Q4, following 2.3% growth in the prior quarter. Q4's reading was the strongest since Q4 2024. On a seasonally adjusted quarter-on-quarter basis, the economy expanded 1.4% in Q4, following 0.4% growth in the previous quarter. For 2025 as a whole, the economy grew 3.2% (2024: +3.8%), marking its weakest performance since the 2020 pandemic downturn.

Exports and consumption drive improvement: Compared with the previous period's data, readings in Q4 improved for private consumption (+2.6% in annual terms vs +1.9% in Q3), government consumption (+4.7% vs +3.8% in Q3) and exports of goods and services (+1.5% vs -1.1% in Q3). In contrast, readings worsened for fixed investment (+7.0% vs +7.5% in Q3) and imports of goods and services (+0.3% vs +2.4% in Q3). NextGenerationEU funds likely continued to bolster government consumption and fixed investment in Q4, following a EUR 835.6 million disbursement in September and the approval of a further EUR 1.1 billion in early December. In addition, near-record low unemployment likely supported household spending, while tourist arrivals grew at a faster pace in Q4 than in Q3; tourism represents about one-fifth of GDP.

GDP growth to slow in Q1 2026: Our panelists expect year-on-year GDP growth to ease in Q1 2026 from Q4 2025, before largely leveling off through the end of 2026, while remaining among the strongest in the euro area. Economic activity should continue to be supported by robust tourism and ongoing NextGenerationEU funding, including an additional EUR 896.9 million payment approved by the EU in early February. Looking further ahead, economic growth is projected to settle just below 3% and remain above the euro area average through 2030.

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