The economy of Croatia may expand about 18% as revenue from tourism grows. Tourism is an important sector in Croatia and contributes a fairly large share to its economy. Revenue generated from tourism-related services provided to visiting tourists is recorded under exported services and is a demand component of GDP. Croatia depends majorly on tourism and, roughly 20% of its revenue comes from foreign visitors during the summer. There is a major dependence on tourists for income generation for resorts in Croatia like Dubrovnik and Rovinj.
One of the most commonly used indicators for assessing the size of tourism of a country is its share of international tourism-related receipts in the economic output. At almost 20% in 2018, the share of international tourism-related receipts of Croatia is one of the highest worldwide. Its share exceeds that of other tourism-intense economies in the Northern Mediterranean, with Malta taking the second spot and Cyprus ranking as third.
The projected growth of tourism in Croatia shows that the demand for tourism services will keep increasing in the coming years, especially due to the rapid income growth in Eastern and Central European economies. This income growth opens up the affordability of international travel to an ever-growing number of households. Croatia has widely reopened its alluring Adriatic coastline for tourists from abroad, becoming one of the first countries in Europe to do away with most of its pandemic measures.
The Croatian government intends to improve tourism dramatically by raising the quality through investment, smart specialization, innovation and, sustainability. It also wants to get a stronger foothold for the Croatian brand in international markets.
Tourism accounts for a major chunk of the economy of Croatia. However, last year tourist arrivals were only about 40% of pre-pandemic 2019. The tourism industry of Croatia has quite a few challenges facing it such as a lack of workers, building over-development, environmental degradation, waste management, seasonality, unbalanced geographic spread and, epidemiological situation. Despite the challenges, the country is optimistic. The central bank raised this year’s growth forecast projection to 6.8% from the earlier prediction of 5.9% growth. The economic expansion is expected to reach 70% of 2019 levels, the year before the Covid crisis.
