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PMR Research is a specialised custom market research unit of PMR Ltd., a British-American company based in Poland. We offer a wide range of research services in Central and Eastern Europe for companies interested in business over the countries in the region.
Research services provided by PMR Research in Croatia include:
Economic and Business Environment Prior to the onset of the economic crisis, the Croatian economy had been growing steadily for over a decade and registering a 4% average growth rate. However, although the country felt the economic crisis and its GDP shrank in 2009 and 2010, it bolstered its economic and fiscal policies in order to remain competitive. As a result, growth is expected to pick up in 2011. Furthermore, according to the World Bank Doing Business Report, Croatia is ranked in 84th place of 181 economies in terms of ease of doing business. The country was also the second most important reformer in terms of starting a business that year, after implementing changes such as facilitating online registration and streamlining the construction permit process. Paying tax and obtaining credit seem to be relatively easy, as Croatia is ranked 43rd and 48th respectively in the world. On the other hand, in terms of protecting investors and employing people, the country performs badly in comparison with other world economies. The need to deal with licences is the most serious obstacle to starting a business in Croatia: the country was ranked 162nd of 178 in terms of this criterion. EU pre-accession funds, along with World Bank and EBRD funding, will make significant infrastructure improvements possible, with transport and education at the forefront. Croatia offers a solid macroeconomic framework and infrastructure, which is crucial in the eyes of investors. However, an inefficient public administration and judiciary are seen as substantial barriers to doing business efficiently and quickly. The Croatian economy is primarily service based, with the service industry accounting for 66% of total GDP. Foreign Direct Investment (FDI) and private consumption contributed more than any other factors to stable growth. Increasing numbers of companies are selecting Croatia’s capital, Zagreb, as a sales and marketing hub. Since 2008 and after a decade of stable growth, the economy has been in recession. In 2008, the growth rate slowed to 2.4%. This was followed by a 5.8% contraction in 2009 and another, of 1.4%, in 2010. Per capita GDP was EUR 9,685 in 2010, and an increase is expected in 2011 as a result of economic growth. The bulk of the GDP is generated by services, with tourism playing a significant part and industry occupying second place. Inflation remained manageable during the economic crisis, reaching 2.4% in 2009 and 2% in 2010. According to the International Monetary Fund, the inflation rate should remain around 2.5-3% until 2014. The unemployment rate reached 9.5% in 2010, a slight increase in comparison with the previous year (9.2%), but still lower than the 9.6% figure of 2007. Current forecasts assume that this trend will be reversed and that there will be a reduction in the ratio of jobless Croatians as a percentage of the total working population to 9% in 2011. There is still significant social inequality in Croatia, with GDP per head of population in Zagreb – the most affluent region – being much higher than that of the provinces, particularly in the war-ravaged areas. Tourism and banking lead the field among Croatian industries in terms of attracting more foreign direct investment (FDI). FDI has been falling steadily in recent years, from a peak of EUR 4.344 billion in 2008 to EUR 2.1 billion in 2009. FDI for 2010 has yet to be calculated but it is estimated to be lower than that of 2009. The three countries which invest the most substantial amounts in Croatia are Austria, Belgium and the Netherlands. The country suffers from a substantial export deficit. Since 2005, imports have been at least double the country’s exports. Italy is the main export and import partner and is followed closely by Germany and Slovenia. The main industrial production subgroups are: electrical engineering, pharmaceuticals, textiles, food processing, chemicals, the manufacture of machines and devices, shipbuilding and telecommunications equipment. The restructuring of the shipbuilding industry will be the main priority for the Croatian government in the next few years. Industrial exports account for more than 95% of Croatia’s total commodity exports. The main industrial enterprises are located around urban centres such as Zagreb, Zadar, Rijeka, Split, Osijek, Karlovac, Sisak and Varazdin. Croatia is located in the southern-central part of Europe. It lies at the crossroads between the Pannonian Plain and the Mediterranean Sea. It shares borders with Slovenia and Hungary to the north, Serbia to the north-east, Bosnia and Herzegovina to the east, and Montenegro to the far south-east. The country borders the Adriatic Sea in the South and West. It shares a sea border with Italy in the Gulf of Trieste. Social environment The country recently faced a substantial amount of migration because of the unbalanced economic development of certain regions. Most of the migrants chose areas of growth, such as the capital, Zagreb, the population of which more than doubled, and is now approximately one million. This rapid urbanisation was accompanied by a substantial reduction in the birth rate, from 22.2 births per 1,000 people in 1947 to an estimated 9.6 per 1,000 in 2011. Croatia now has a population of 4.5m, and this figure has remained relatively stable. The net migration figure was approximately 7,000 in 2007. The 2011 male-to-female ratio is estimated to be 0.93. Political environment Croatia has emerged as one of the most successful countries of the former Yugoslav Republic. Since adopting its 1990 constitution, it has been a parliamentary democracy. All citizens of Croatia are guaranteed freedom, equality and human rights. When comparing Croatia with its European neighbours, the political risk associated with doing business is relatively low. Political stability often encourages foreign investors. Croatia is a member of the United Nations, the OSCE (the Organisation for Security and Co-operation in Europe) and the Council of Europe. The country is currently negotiating with regard to membership of the European Union, its most important trading partner. It joined NATO in April 2009. The President of Croatia, the head of the state, takes office after a general election and serves for a period of five years. In addition, the President is the Commander in Chief of the Armed Forces and is heavily involved in decision-making with regard to foreign policy and national security. The Croatian Parliament is a single chamber legislative body of 152 representatives (one seat was added in the November 2003 parliamentary elections), all elected by popular vote to serve four-year terms. In February 2010 Ivo Josipovic, a representative of the Socialist Democratic Party, was elected as the third president of Croatia. Jadranka Kosor, the Croatian Prime Minister, backed by the Croatian Parliament, prioritised EU accession and foreign investment. Economic growth and stability, which have sometimes required unpopular measures such as tax increases, are also among the country’s internal priorities. The EU has expressed serious concerns about the judiciary and the high level of corruption, which, in its view, have the potential significantly to undermine the country’s economic development. Croatia is expected to develop a more efficient administrative capacity, which is essential for implementing the acquis communautaire. The EU is expected to conclude its membership negotiations with Croatia in the first half of 2011, but past deadlines were moved because of the country’s lack of preparedness or because of the EU’s cautionary stance toward the admission of new members during the economic crisis. The government has launched several important reforms to improve the investment climate. These include the introduction of stop shops for business registration, tax and customs. These reforms have been highly successful: Croatia’s efforts have been recognised by the World Bank’s Doing Business 2008 report, in which the country was ranked as the foremost reformer in Europe and the runner-up globally. Infrastructure and technological environment Croatia is located at the crossroads of the most important highways in Europe. By Eastern European standards, it has a comparatively well-developed infrastructure. Throughout the last decade the transport network has been developing significantly, and it should be noted that the construction of new roads has been of paramount importance. The highly developed motorway network stands in stark contrast to the condition of state, county and local roads. In 2004 the Croatian government adopted the Public Roads Construction and Maintenance Programme for the period 2005-2008. It intends to invest substantial amounts in national infrastructure in order to attract investors who consider developed infrastructure a key factor in starting a business. Croatia hopes to become an important transit and economic hub in the region. The existing network of roads, motorways and airways, along with its sea ports, provides good area coverage. However, the government recognises that there is still room for improvement, and various measures and initiatives are, therefore, still being implemented. According to the CIA, Croatia’s transport system consists of about 29,278 km of intercity roads, of which 1,043 km are expressways. There is a 2,772 km railway network, of which about 250 km are double track and 1,000 km electrified. Interestingly, the length of railway in Croatia exceeds the European average by almost 40%; the country has more than 60 km of rail track per 100,000 people. The main sea ports are Rijeka and Ploce, and these are supported by five secondary harbours, in addition to numerous river ports on the 918 km of the Sava and Drava rivers. The internet penetration rate reached 50% in 2009, whereas the figure for mobile telephony was 135%. General dataArea: 56,594 sq kmPopulation: 4.5 m (2011) Capital: Zagreb Language: Croatian Ethnic groups: Croat 89.6%, Serb 4.5%, other 5.9% National boundaries: Bosnia and Herzegovina (932 km), Hungary (329 km), Serbia (241 km), Montenegro (25 km), Slovenia (455 km) Major economic indicators
Useful dataCurrency: Kuna (HRK)Exchange rate: HRK 1 = EUR 0.1352 (2011) Time zone: GMT +1 Area code: +385 If you would like to find out more on the Croatian market opportunities please do not hesitate to contact us directly: phone: (48 12) 618 90 80 faks (48 12) 618 90 08 e-mail: [email protected] PMR Business Solutions in Croatia
Croatia market reports To purchase or find detailed information on PMR Publications reports covering the general economy, construction, retail, pharmaceutical, and ICT sectors in Croatia. If you are looking for greater detail trust our research and consulting divisions to carry out projects tailored to your business needs. Croatia market research PMR Research offers a full array of qualitative and quantitative research methodologies, providing services such as customer satisfaction studies, brand awareness and brand image research, distribution and competition studies, segmentation and sector analyses. Croatia consulting PMR Consulting offers a wide range of consulting services in Central and Eastern Europe for foreign companies interested in the region. The typical projects include: competitive intelligence, sourcing, strategic advisory, consulting at foreign direct investments and mergers & acquisitions.
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