Growth returns but challenges remain
The urgent need for successive governments is to implement structural reforms, improve overall productivity and commit to its four programme plans financed by European funds (€10.7 billion over the period 2014-2020). Main sectors concerned: the environment, energy efficiency, SME competitiveness, transport infrastructure. While growth returned in 2018, other concerns remain in Croatia, such as declining demographics, high unemployment, low productivity, the informal economy, ecological transition, debt burden or the economy's dependence on the tourism sector.
At the beginning of 2015, HDZ finds a new lease of life. On 9 January, it was a woman, Kolinda Grabar-Kitarović, who for the first time became President of the Croatian Republic at a time when the European context was tense. Against the backdrop of a major migration crisis, the thirteenth government's transfer to the far right is accelerating, shaking up its rhetoric of "patriotic values" and identity withdrawal.
Six months after the formation of a radical government, with a businessman as Prime Minister (Tihomir Orešković) and an ultra-Catholic revisionist to culture (Zlatko Hasanbegović), social discontent is increasing. A motion of no confidence in the government is launched. The causes are multiple: right-wing drift against a backdrop of exaltation of traditional values, education reform that is going badly, criticism of the media that feel brought into line, dangerous revisionism of the last war, suspicions of conflicts of interest closely affecting Deputy Prime Minister Karamarko. As the ruling deputies and the social democrats failed to agree to form a coalition, the dissolution of Parliament was voted on 20 June 2016. During the early parliamentary elections (11 September), the HDZ conservatives remained in power thanks in particular to the rallying of the conservative Most party, close to the Catholic Church and guardian of orthodoxy.Return of political stability
At the head of this new coalition government (the third in two years!), Andrej Plenković, the head of the HDZ, a former diplomat and MEP, brings a certain stability. The Prime Minister is committed to maintaining a centrist course, wishing to turn his back on the populist and nationalist wing of his predecessor.
Plenković appoints seven new ministers, notably for Education and Construction, which demonstrates greater political maturity and still a clear desire to get out of internal disputes. Its programme remains focused on restructuring and even privatising public administration and enterprises to strengthen competitiveness. In 2017, the adoption of a tax reform, the reduction of the number of employees in State bodies, the revision of civil servants' social benefits, but also reforms of the pension system, the hospital system and the management of the birth rate crisis are all major issues that are of direct interest to the various strata of civil society.As of 2018, the economic recovery is definitely here!
With positive growth forecasts (around 2.7% for 2020) and a GDP of €49.8 billion, economic observers confirm the good results. They are achieved thanks to the rebound in domestic demand, but above all thanks to the surge in tourism figures (from 20% to 25% of GDP). A veritable source of foreign currency and investment, this single industry is concentrated on the Adriatic coast, in the archipelagos as well as in the capital and historic cities.
But mass tourism presents long-term risks, not to mention its impact on the environment, while other economic indicators are worrying. The industrial decline in the share of the main sectors of activity, the dynamism of sales, the dwindling transactions (wood, textiles, electric transformers, turbines, car parts, boats, medicines), low productivity, while imports are increasing, the upheavals in the fisheries sector under Brussels' responsibility, agriculture in difficulty within the EU... so many obstacles to maintaining a healthy and diversified economy, which benefits everyone. The government wants to be reassuring. A better orientation of employment, more equitable tourism benefits and likely income tax relief should continue to support household consumption, despite the resurgence of inflationary pressures. Public investment, particularly in energy and transport, should benefit from a better absorption of European structural funds. These will continue to provide support for project financing (water, energy, modernisation of public services, port and rail infrastructure, consolidation of SMEs and SMIs), all with an allocated budget of €11 billion over the period 2014-2020.Another government priority is the fight against youth unemployment
From a rate of around 16 per cent in May 2015, the national unemployment rate fell to 7.1 per cent (June 2019), but still affects nearly one in three young people, 20.9 per cent among those under 25 years of age (April 2019). As a result, since 2013, as the population ages, young people are migrating massively in search of a better future. This phenomenon has become more pronounced since applicants for departure no longer need a visa to work in Europe. Most of the young people who stay in the country want to move or retrain in the tertiary sector, especially in tourism services, given that the average Croatian salary in Zagreb is €877. In fact, to combat this demographic crisis and lack of prospects, the centre-left political party, which will return to power in 2020, will have to take stronger measures than increasing family allowances or increasing places in nursery schools.
