Tbilisi United
Levelling the start-up
parallax background

Economy in focus: Croatia

In the medium-term, labour shortages could be an obstacle to higher levels growth

July 9, 2024

7 min read

By

July 9, 2024

By

7 min read

In the first quarter of 2024, Croatia recorded over 15 per cent more tourist arrivals and overnight stays than in the same period last year, crucial for a country in which the tourism sector contributes almost a quarter of GDP. 

The boom in tourism has been driven by the country’s accession to the EU’s border-free Schengen Area and euro single currency areas last year, while EU-related funds are further supporting investment activity. 

It’s no surprise then that Croatia’s GDP expanded by 3.9 per cent year-on-year in the first quarter of 2024, with many analysts, including the Vienna Institute for International Economic Studies (wiiw), now predicting a healthy growth rate of three per cent for the full year. This builds on its robust growth of 2.8 per cent in 2023, one of the highest levels of growth in the EU. 

According to the World Bank, investment growth is expected to remain relatively strong, supported by EU funds and improved private sector investments. Improvements in the external environment, less restrictive monetary policy, and EU funds will also continue to support economic activity. 

In its latest economic forecast for the emerging Europe region, published last week, wiiw adds that thanks to softer pressures from energy and commodity prices, inflation in Croatia will continue to decline gradually; but upward pressure from rising wages will mean it remains above the euro area target, averaging 3.7 per cent in 2024.  

“We expect nominal and real gross wages in Croatia to continue to grow in 2024, albeit more slowly than in 2023,” wiiw states in its forecast. “The public-sector unions signed a collective-bargaining agreement in March 2024, which will also result in pay increases for public employees.” 

The Vienna Institute also notes however that a lack of skilled workers remains an issue for the economy and an obstacle to higher GDP growth over the medium term. 

According to the European Council of Foreign Relations (ECFR), Croatia is attempting to compensate by bringing in migrant workers, particularly from Nepal.  

Last year, nearly 15,000 Nepali workers immigrated to the country compared to just four in 2017. This year, the number of registered foreign workers could reach almost 200,000 with estimates suggesting that by 2030, every fourth worker in Croatia could be a foreigner. 

Key sectors 

Away from tourism, manufacturing is another crucial sector, accounting for about 20 per cent of GDP.  

Croatia has a well-established tradition in shipbuilding, pharmaceuticals, food processing, and automotive parts production.  

The country is positioning itself as a hub for advanced manufacturing and innovation (Rimac, which builds the world’s fastest electric cars at a plant just outside Zagreb, is a leader here), supported by government incentives and access to the EU market.  

Investors can explore opportunities in expanding production capacities, adopting new technologies, and entering into joint ventures with local firms.  

Then there’s agriculture, which employs around six per cent of the workforce and contributes three per cent to GDP.  

The country’s fertile land and favorable climate conditions are ideal for growing a variety of crops, including olives, grapes, and wheat. Organic farming and agri-tourism are burgeoning sectors, with increasing demand for high-quality, locally produced food. Investment opportunities include modernising agricultural practices, developing food processing facilities, and enhancing supply chain logistics. 

The energy sector 

The energy sector in Croatia is currently undergoing significant transformation, driven by the need to enhance energy security, reduce dependency on fossil fuels, and meet EU climate targets.  

The country has a diverse energy mix, including hydroelectric power, natural gas, and an increasing share of renewable energy sources such as wind and solar power. 

Croatia’s renewable energy sector offers vast investment potential. The government has set ambitious targets to increase the share of renewable energy in the total energy consumption to 36.4 per cent by 2030. Wind energy is particularly promising, with several projects already operational and many more in the pipeline. Solar energy is also gaining traction, supported by favorable geographic conditions and government incentives. 

Investors can explore opportunities in developing large-scale wind and solar farms, investing in energy storage solutions, and participating in public-private partnerships to upgrade the national grid. The country’s commitment to renewable energy is further underscored by its participation in the European Green Deal, which aims to make Europe the first climate-neutral continent by 2050. 

Improving energy efficiency is another critical area for investment. Croatia has launched various initiatives to enhance energy efficiency in buildings, transportation, and industry. These efforts are supported by EU funding and national programmes, creating opportunities for investors in energy-efficient technologies, smart grid solutions, and retrofitting projects. 

Natural gas remains an essential component of Croatia’s energy strategy, particularly in the transition period towards a more sustainable energy system. The country’s strategic position makes it a vital energy transit route, with the potential to become a regional hub for natural gas distribution. Investment opportunities exist in expanding the LNG terminal on the island of Krk, developing new gas storage facilities, and enhancing pipeline infrastructure. 

Gender equality

New World Bank analysis published last week meanwhile shows that Croatia remains among the lowest-ranked EU countries for overall gender parity even though the adoption of EU standards in gender equality have brought about important policy changes and advancements.

Croatia Gender Landscape 2024 indicates that more work is needed to fully address the deeper, systemic issues of gender equality in Croatia, which perpetuate significant gender gaps across six areas: work, money, knowledge, time, power and health.

The analysis notes that Croatia’s journey towards gender parity has been marked with some progress, especially on the significant human capital Croatian women have built over time. However, these efforts have not fully translated into positive labour-market outcomes, income generation opportunities, or decision-making power.

For example, Croatian girls outperform boys in education, but these successes do not fully carry over into their careers. Despite strong academic achievements, women continue to face a persistent gender gap in employment rates, particularly among those of childbearing age. They earn less income than men, with the wage gap showing signs of widening over time.

In Croatia, women spend nearly 20 hours more than men on unpaid work, making the country a clear outlier among EU member states. While women have made some strides in political representation, their presence in high-level economic roles remains low.

“Women represent half of Croatia’s population but the current lack of economic opportunities and flexible work arrangements, as well as social norms and stereotypes, are preventing them from reaching their full economic, political, and social potential,” says Nga Thi Viet Nguyen, World Bank Senior Economist for Poverty and Equity and lead author of the report. “The right policy mix can substantially advance gender equality in Croatia, bringing more robust and inclusive economic growth and multiple benefits for the whole society.”

Political climate 

On a political note, the ruling Croatian Democratic Union (HDZ) party, led by Prime Minister Andrej Plenković, won a parliamentary election in April 2024 and has since managed to form a new governing coalition with the right-wing Homeland Movement (DP).  

While the inclusion of the DP in the new coalition initially spooked investors, most key ministries remain in the hands of the broadly centrist HDZ, “[which] will ensure that there are no major changes in terms of economic policies in the forthcoming period,” according to the Vienna Institute for International Economic Studies. 

Marek Grzegorczyk

Marek Grzegorczyk

Marek Grzegorczyk is an analyst at Reinvantage.

Share

You might also find these insightful

✕

Case study: Global technology company

1. The Client

A global technology company operating across EMEA, with a regional HQ in Istanbul. The company manages 20+ markets, handling everything from brand campaigns to strategic partnerships.

Role we worked with: The EMEA Head of Marketing (supported by two regional managers).

2. The Challenge

Despite strong products and a respected global brand, the regional team was struggling with:

  • Misaligned strategy across markets → campaigns executed with inconsistent narratives.
  • Slowed growth → lead generation plateaued despite increasing spend.
  • Internal friction → marketing, sales, and product teams disagreed on KPIs and priorities.

Traditional fixes (more meetings, more reporting) only created more noise.

3. The Sprint

We ran a 10-day Remote Reinvention Sprint with the regional HQ team.

  • Day 1–3: Intake → Reviewed decks, campaign data, and plans.
  • Day 4: Sprint Session (90 mins) → Breakthroughs:
    • Sales and marketing had different definitions of “qualified lead.”
    • 40% of spend was going into low-potential markets.
    • The team assumed the problem was lack of budget, but it was actually lack of alignment.
  • Day 5–10: Synthesis → Insights distilled into a Clarity Brief + Insight Canvas.
4. The Breakthrough

The Sprint uncovered that the issue wasn’t budget, but fragmentation.
Three sharp insights unlocked a way forward:

  1. Unified KPIs bridging marketing + sales.
  2. Market prioritisation → shifting budget to 5 high-potential markets.
  3. Simplified narrative → one EMEA core story, locally adaptable.
By just realigning resources and focus, the client could unlock an estimated £250,000 in efficiency gains within the next 12 months — far exceeding the Sprint’s value guarantee. The path to higher returns was already inside the business, hidden by misalignment.
5. From Sprint to Action (4 Pillars Applied)

With clarity secured, Reinvantage didn’t suggest “more projects.”

Instead, we used the Sprint findings to create laser-focused next steps — drawing only from the areas that would deliver the most impact:

  • Readiness → Alignment workshops for sales + marketing teams. New playbooks clarified “qualified lead” definitions and reduced internal disputes.
  • Foresight → A market-opportunity scan identified which 5 countries would deliver the highest ROI, removing the guesswork from allocation.
  • Growth → Guided the reallocation of €2M budget and designed a phased rollout strategy that protected risk while maximising return.
  • Positioning → Built a messaging framework balancing global consistency with local nuance, ensuring campaigns spoke with one clear voice.

Because the Sprint had stripped away noise, these actions weren’t generic consulting ideas — they were directly tied to the breakthroughs.

6. The Results
  • +28% increase in qualified leads across the region.
  • 30% faster campaign rollout due to streamlined approvals.
  • Budget efficiency gains → €2M redirected from low-return to high-potential markets.
  • Internal cohesion → marketing + sales now use a single shared dashboard.
The client came in believing they needed more budget.
The Sprint revealed that what they really needed was clarity and alignment.

With that clarity, the four pillars became not theory, but practical tools to deliver measurable impact.

The Sprint guaranteed at least £20,000 in value — but in this case, it helped unlock more than 10x that within six months.
✕

Case study: Regional VC fund & accelerator

1. The Client

A regional venture capital fund and accelerator focused on early-stage tech start-ups in the Baltics and Central Europe.

The fund had raised a new round and was under pressure to deliver stronger returns while also building its reputation as the go-to platform for founders.

Role we worked with: Managing Partner, supported by the Head of Portfolio Development.

2. The Challenge

Despite a promising portfolio, results were uneven.

Key issues:

  • Scattered portfolio support → no consistent playbook for start-ups, every partner did things differently.
  • Weak differentiation → founders and co-investors saw the fund as “one of many” in the region.
  • Stretched team → too many small bets, not enough clarity on which companies to double down on.

The leadership team knew something was off, but disagreed on whether the issue was pipeline quality, market conditions, or internal capacity.

3. The Sprint

We ran a 10-day Remote Reinvention Sprint with the partners and portfolio team.

  • Day 1–3: Intake → Reviewed pitch decks, pipeline funnel data, and start-up performance reports.
  • Day 4: Sprint Session (90 mins) → Breakthroughs:
    • No shared definition of a “high-potential founder.”
    • Support resources were spread too thin across the portfolio.
    • The fund’s positioning was more reactive than proactive — it didn’t own a distinctive narrative in the market.
  • Day 5–10: Synthesis → Insights consolidated into a Clarity Brief + Insight Canvas.
4. The Breakthrough

The Sprint revealed that the challenge wasn’t pipeline quality — it was lack of focus and positioning.

Three core insights provided the turning point:

  1. Portfolio Prioritisation Framework → defined clear criteria for where to double down.
  2. Founder Success Playbook → standardised support model for portfolio companies.
  3. Differentiated Narrative → repositioned the fund as “the accelerator of reinvention-ready founders.”
These shifts alone gave the fund a path to add an estimated £2M+ in portfolio value over the following 18 months, by concentrating capital and resources where they could move the needle most.
5. From Sprint to Action (4 Pillars Applied)

With clarity from the Sprint, Reinvantage created a tailored support plan:

  • Readiness → Coached partners on using the new prioritisation framework and trained the team on deploying the Founder Success Playbook.
  • Foresight → Ran scenario analysis on regional tech trends, helping the fund anticipate where capital would flow next.
  • Growth → Guided resource reallocation across the portfolio and supported new co-investor pitches for top-performing start-ups.
  • Positioning → Crafted a sharper brand story for the fund, positioning it as the reinvention partner for globally minded founders.
6. The Results
  • 10 portfolio companies onboarded to the new Playbook → greater consistency of support.
  • Raised follow-on capital for 3 top start-ups with the new prioritisation framework.
  • +26% increase in inbound deal flow from founders citing the fund’s new positioning.
  • Stronger internal cohesion → partners aligned on where to focus resources.
The client thought the problem was pipeline quality.
The Sprint showed it was actually lack of clarity and focus inside the firm.

By applying the four pillars, Reinvantage helped turn scattered effort into concentrated value creation.

The Sprint guaranteed at least £20,000 in value; here it set the stage for multi-million-pound upside in portfolio growth.
✕

Case study: International impact Organisation

1. The Client

A large international impact organisation focused on entrepreneurship and economic empowerment.
The organisation runs multi-country programmes across Eastern Europe and Central Asia, often in partnership with global donors and corporate sponsors.

Role we worked with: Senior Programme Director, responsible for regional coordination.

2. The Challenge

The organisation had launched a flagship regional initiative supporting women entrepreneurs, but the programme was underperforming.

Key issues:

  • Fragmented delivery → each country office interpreted the programme differently.
  • Donor frustration → reporting lacked consistency and clear impact metrics.
  • Lost momentum → staff energy was spent on administration rather than scaling success stories.

Traditional programme reviews had produced long reports, but no real alignment or action.

3. The Sprint

We ran a 10-day Remote Reinvention Sprint with the regional leadership team and representatives from two country offices.

  • Day 1–3: Intake → Reviewed donor reports, programme KPIs, and field feedback.
  • Day 4: Sprint Session (90 mins) → Breakthroughs:
    • Donors cared about quantifiable outcomes, but reporting focused on stories.
    • Staff were duplicating efforts across countries, wasting time and resources.
    • The initiative lacked a clear theory of change — everyone described its purpose differently.
  • Day 5–10: Synthesis → Insights distilled into a Clarity Brief + Insight Canvas.
4. The Breakthrough

The Sprint revealed that the issue wasn’t donor pressure or programme design — it was a lack of shared framework and alignment.

Three critical insights reshaped the path forward:

  1. One Unified Theory of Change → agreed narrative for why the programme exists.
  2. Core Impact Metrics → clear, comparable KPIs across all countries.
  3. Smart Resource Sharing → digital hub to stop duplication and accelerate knowledge flow.
By eliminating duplicated reporting and clarifying what success looks like, the client saw they could save the equivalent of £100,000 in staff time annually — while also unlocking stronger donor confidence and follow-on funding opportunities.
5. From Sprint to Action (4 Pillars Applied)

Armed with Sprint clarity, Reinvantage proposed a laser-focused support plan:

  • Readiness → Trained programme leads on using the new metrics and integrated them into existing workflows.
  • Foresight → Analysed donor trends and expectations, aligning the initiative with the next funding cycle.
  • Growth → Developed a funding case based on the new unified theory of change, securing higher renewal chances.
  • Positioning → Crafted a regional success narrative and storytelling toolkit, helping them showcase results consistently across markets.
6. The Results
  • 30% less time spent on reporting → freed capacity for programme delivery.
  • Donor satisfaction improved → positive feedback on the clarity of impact evidence.
  • Secured new funding commitment → one major donor increased their contribution by 20%.
  • Stronger internal morale → staff felt they were working with clarity, not chaos.
The client thought it needed better donor management.
The Sprint revealed it needed a shared foundation across its teams.

By anchoring on the four pillars, Reinvantage turned alignment into efficiency gains and fresh funding opportunities.

The Sprint guaranteed at least £20,000 in value; here it unlocked both six-figure savings and future-proofed funding.
✕

Case study: National digital development agency

1. The Client

A national digital development agency tasked with driving the government’s digital transformation agenda, including e-services, citizen portals, and smart city pilots.

Role we worked with: Director of Digital Transformation, supported by IT and service delivery leads from three ministries.

2. The Challenge

The agency had strong political backing but faced hurdles in implementation.

Key issues:

  • Siloed projects → each ministry developed digital tools independently, leading to duplication.
  • Citizen frustration → services were digital in name, but still required multiple logins and offline steps.
  • Funding pressure → international partners demanded clearer impact in the short term.

The agency wanted to accelerate momentum but struggled to get alignment across ministries.

3. The Sprint

We ran a 14-day Immersive Reinvention Sprint with the agency’s leadership and digital focal points from three ministries.

  • Day 1–3: Intake → Reviewed strategy docs, donor reports, and citizen feedback data.
  • Day 4: Immersive Sprint Session (half-day) → Breakthroughs:
    • Each ministry had different definitions of “digital service.”
    • 20% of budget was going into overlapping pilot projects.
    • Citizens’ top frustrations were known — but not prioritised.
  • Day 5–14: Synthesis → Insights consolidated into a Clarity Brief + Insight Canvas.
4. The Breakthrough

The Sprint revealed that the biggest blocker wasn’t lack of funding, but lack of shared priorities.

Three practical insights stood out:

  1. One Definition of Digital Service → agreed across ministries.
  2. Quick-Win Prioritisation → focus on top 3 citizen pain points (ID renewal, business registration, healthcare booking).
  3. Shared Resource Map → pool budgets to eliminate duplication.
These changes alone allowed the agency to unlock £75,000 in immediate savings and deliver 2–3 visible improvements in the next quarter — meeting donor expectations and building citizen trust.
5. From Sprint to Action (4 Pillars Applied)

Based on the Sprint clarity, Reinvantage proposed a modest, targeted package of support:

  • Readiness → Facilitated inter-ministerial workshops to embed the “one digital service” definition.
  • Foresight → Analysed citizen feedback trends to shape the quick-win roadmap.
  • Growth → Supported the reallocation of funds to joint projects, reducing overlap.
  • Positioning → Crafted a communication plan highlighting early digital wins to donors and citizens.
6. The Results
  • 2 pilot services integrated into the central portal (ID renewal + healthcare booking).
  • Budget savings of £75,000 from eliminating overlapping projects.
  • Citizen satisfaction up modestly → call centre complaints on digital services dropped by 12%.
  • Donor confidence improved → short-term impact report received positive feedback.
The client thought it needed more funding and bigger projects.
The Sprint revealed it first needed clarity and alignment.

By applying the four pillars to a targeted scope, Reinvantage helped deliver visible results within a single quarter — proving progress to citizens and donors and laying the groundwork for deeper transformation.