Croatia - Economic sectors

Being a small country, Croatia contributes relatively little to worldwide production in each of its 3 sectors. The country's economy is based on services, dominated

by tourism and manufacturing, with international trade also an important contributor to the economy. The 5 years of war were mostly responsible for the country's poor economic performance, and post-war recovery has proceeded slowly. Other factors that limit economic growth are an inadequate legal structure and bureaucratic red tape, both of which restrict business activity; a slow privatization process; a poorly developed banking sector; and insufficient highway infrastructure. Some of these problems, such as privatization and highway construction, are being addressed, but it will take time for projects to be completed and for their effects to be felt.

Prior to the 1990s Croatia, and especially its beautiful Dalmatian coast, was a popular vacation spot for many Europeans, but with the eruption of war in 1991, tourism was decimated. Since the end of the conflict in 1995 the sector has seen a slow but steady recovery. Tourism was an important element in the services sector and contributed 71 percent to the GDP in 1999.

Agricultural production has been in decline since 1992, averaging about 60 percent of pre-war levels. Again, the war contributed heavily to the disruption of agriculture, but 1998 brought severe heat and drought, which caused disease and further hindered crop growth. By 1999 agriculture contributed just 10 percent to the GDP.

Industrial production declined sharply during the war years. Some of the worst fighting and destruction took place in areas where industry was located. During the war, this sector produced only a half of what it had in peacetime. Since 1996, industrial production has been experiencing growth, but certain industries tend to do better than others. The most successful are those, such as the food and beverage industry and manufacturing of chemicals and chemical products, that underwent restructuring as a result of privatization. One of the most important companies headquartered in Croatia is the Croatian pharmaceutical giant, Pliva, whose shares are traded on the Zagreb and London stock exchanges. Major foreign companies who have a significant presence in the country are Swedish Ericsson (telecommunications), Austrian Hofmann & Pankl Bet (mineral processing), Swiss Soc. Suisse de Cim. Port. (cement production), Dutch Grassette Nederland (maritime services), Austrian Messer Griesheim (industrial gasses) and the U.S. Coca-Cola Export Corp. (beverages). All told, industry contributed 19 percent of the GDP in 1999.