Croatia - Future trends



For Croatia the 1990s were difficult and traumatic. The country experienced war devastation, population displacement, and turbulent political change, all of which contributed to its ruined economy. As the 21st century gets under way, Croatia faces serious and urgent challenges in improving its economic situation. The country needs to make major policy reforms. Improved administration of business activity—including cutting red tape, offering tax incentives to stimulate business growth, and completing the privatization process—must be implemented. Reform is also necessary to increase the effectiveness of the health and pension systems. Improvement of the banking sector is another key factor in easing the path of such reforms. A firm commitment to these reforms would send a positive signal to foreign investors and act as an encouragement to international aid in financing reform. If these challenges are met and international investment acquired, Croatia could implement programs for sustained economic growth, thus achieving a higher standard of living for its people and full integration into the rest of Europe.

Successful restructuring is possible and realistic since the country possesses the necessary infrastructure and expertise. Its location and its promising economic opportunities are attractive to investors. What is desperately needed is decisive action by the government, which needs to grasp the necessity for economic reforms and to begin their implementation without delay; delay would serve only to burden the economy with more costly adjustments in the future. Without reform, growth will not be possible, unemployment will remain high, the banking system weak, and the economy will not recover.

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