WIIW The Vienna Institute for International Economic Studies - Wiener Institut für Internationale Wirtschaftsvergleiche

In Croatia the economy faced another year of recession in 2010. The recovery expected for 2011 hinges on a further improvement in external demand. Employment will continue to contract as the labour market reacts rather belatedly to production growth, and unemployment is expected to stagnate or at best drop only slightly. It is thus expected that private consumption will recover only gradually. The current account deficit will remain within more moderate limits than before the crisis, ranging between 4-5% in the years to come. Servicing foreign debt will remain one of the key challenges.