Croatia’s economy grew by 2.9% YoY in Q1 2025, supported by solid domestic demand, tourism activity, and a healthy labor market. Slovenia, by contrast, recorded a 0.7% decline in GDP, with investment continuing to fall and foreign trade contributing negatively. While both countries remain sensitive to external conditions, Croatia entered 2025 with stronger internal momentum, whereas Slovenia is still feeling the drag from weaker industrial output and softer capital spending.
Croatia
Croatia’s real GDP rose by 2.9% YoY in Q1 2025, according to the preliminary estimate by the Croatian Bureau of Statistics. While this marks a deceleration from Q4’s strong 3.9% YoY, the result still reflects solid and resilient growth, comfortably outpacing the euro area average. On a seasonally adjusted basis, GDP expanded by 0.3% QoQ — the fifth consecutive quarterly gain, though at a slower pace.
The YoY slowdown is primarily tied to weaker household consumption, which eased the growth of 1.7% YoY (Q4: 6.3%), likely reflecting base effects and normalisation in real spending after the holiday spending in Q4. Government consumption remained strong at 5.8% YoY, while investment cooled to 4.5% YoY after a robust 9.5% YoY in Q4. Net exports supported growth — goods exports surged 11.6% YoY, more than offsetting the ongoing drag from services exports (-1.8% YoY), while imports rose 8.8% YoY.
Seasonally adjusted quarterly YoY GDP development (Q1 2010 – Q1 2025, %)
Source: DZS, InterCapital Research
On the supply side, gross value added (GVA) increased by 2.7% YoY (Q4: 3.5%), led by construction (+7.1% YoY) and a modest rebound in manufacturing (+2.3% YoY). Service sectors lost momentum, with trade and transport at just +0.8% YoY, and ICT dipping into negative territory (-0.7% YoY).
In sum, while Q1 marks a step down from the very strong Q4, growth remains healthy and diversified. Croatia continues to outpace regional peers, though some cooling is now evident in private consumption and select services.
Slovenia
In the first quarter of 2025, Slovenia’s GDP contracted by 0.7% YoY, with seasonally adjusted data showing a 0.8% decline on an annual and quarterly basis. Domestic expenditure rose by 0.8%, driven by a 1.0% increase in final consumption, while household spending edged up only 0.4%. Investment activity remained weak, as gross fixed capital formation fell 5.1% YoY, mainly due to a 9.0% drop in construction investment, which had the biggest impact on the data. External trade developments also weighed on GDP: while exports remained flat (+0.1%), imports rose 1.9%, with growth of 7.7% in services, resulting in a negative contribution of net exports.
By sector, total value added decreased by 0.8% YoY. The sharpest declines were recorded in Construction (-6.0%) and Manufacturing (-2.5%), while Information and Communication grew 1.2%, and public services such as education and healthcare also contributed positively. The continued downturn in construction and subdued industrial output reflect ongoing weakness in investment and foreign demand, signaling a challenging start to the year for Slovenia’s economy.
Slovenian GDP YoY growth rates (Q1 2015 – Q1 2025, %)
Source: SURS, InterCapital Research
Croatia remains above the EU average in terms of growth, and current trends suggest this momentum could continue in the coming quarters and for the full year, supported by strong domestic demand, a resilient labor market, and expected tourism inflows. Slovenia, meanwhile, lags behind, with a GDP contraction in Q1, though low inflation, currently below target, offers space for recovery in consumption and investment. While Croatia still faces inflation slightly above target, the overall macro outlook remains positive, especially with the tourism high season approaching.