Croatia's construction sector is navigating a complex landscape of mixed economic and political signals, creating uncertainty about its future, according to an opinion by Michael Glazer (SEE Regional Advisors) and Tatjana Halapija (Nada Projekt), members of the Eastern European Construction Forecasting Association (EECFA) in Croatia.
While business optimism and tourism figures have been strong, concerns about rising prices, slowing GDP growth, and new regulations are clouding the outlook.
A recent European Investment Bank survey indicated that 78% of Croatian firms are optimistic about their investment plans, aligning with the EU average of 80%. Additionally, Croatia's tourism sector has seen growth in visitor numbers and overnight stays.
However, there are worrying signs. Foreign tourist revenues have not kept pace with inflation, effectively decreasing in real terms. This trend threatens the future of Croatian tourism and, consequently, construction output.
The European Commission forecasts a decline in Croatia's GDP growth from 3.6% in 2024 to 2.9% in 2026, further dampening the prospects for construction. New laws imposing taxes on real estate and tourism, along with limitations on short-term rentals, add to the uncertainty.
"The threat for Croatia is that the result will be deeper and longer recession in Germany, the country on which it counts for much of its tourism revenues, or even worldwide, which would prevent Croatia from making up for lost European tourists by increasing its appeal to non-traditional visitors," according to the opinion.
Despite these challenges, EU funds continue to support Croatia, benefiting civil engineering and building construction. The City of Zagreb is also planning major construction projects, and there is a demand for more logistics facilities.
The combined effect of these factors makes it difficult to predict the trajectory of Croatia's construction sector. The 2025 Summer EECFA Forecast Report is expected to provide more clarity, particularly after Croatia's municipal and regional elections.
