In an analysis published on Monday evening, the Standard & Poor's agency states that the reforms being implemented by Croatia and strong economic growth will help maintain stable income growth.
S&P estimates that the Croatian economy will grow relatively strongly, averaging around 2.9% from 2025 to 2028, thanks to robust tourism, investments, and the recovery of external demand.
The agency states that moderate fiscal consolidation will help reduce the budget deficit to around 2% of GDP by 2028, down from an estimated 2.6% in 2024.
This, it is noted, will lead to a decline in the general government debt-to-GDP ratio to approximately 51% by 2028, compared to 68% in 2022.
According to S&P, inflows on the capital account—primarily EU grants—and stable foreign direct investments will cover current account deficits, thus supporting continued deleveraging until 2028.
Last Friday, the Fitch credit rating agency also affirmed Croatia's rating at 'A-'with the Outlook remaining stable, highlighting the country's fiscal discipline and robust economic growth, however, it warns that this small economy is vulnerable to external shocks.
"Croatia's ratings reflect its credible policy framework supported by its EU and eurozone membership, a record of fiscal discipline and commitment to EU fiscal rules, and robust economic growth," that credit agency says.
Solid growth outlook: Croatian economy has continued to outperform regional peers
The Croatian economy has continued to outperform regional peers, with real GDP growth accelerating to 3.8% in 2024, from 3.3% in 2023, on strong real wage growth, fiscal stimulus and high EU funds inflows.
Fitch expects growth to ease to 3.2% in 2025, above its December 2024 forecast of 1.2% for eurozone and 2.3% for the 'A' median, amid moderating private consumption and investment growth, and heightened external uncertainty. We expect growth to slow towards its potential of about 2.5% in 2026.