Croatia and its economy continued with the expected hot run. Q3 brought another solid performance, with GDP accelerating both QoQ and YoY. Growth reached 2.3% YoY in Q3 and averaged 3.0% YoY in 9M 2025, in real terms. After a 3.6% rise in Q2, momentum slowly diminished, but still marked the 19th consecutive quarter of uninterrupted expansion.
Croatia continued its strong macro performance in Q3, extending its expansion streak and holding its position among the faster-growing EU economies. Real GDP rose 2.3% YoY in Q3 and averaged 3.0% YoY in the first nine months of the year. On a seasonally adjusted basis, GDP increased 0.3% QoQ and 2.6% YoY. The slight cooldown from Q2’s 3.6% YoY growth is visible, but the broader message is clear. This remains a controlled moderation rather than a loss of momentum, with the economy still supported by resilient domestic demand and strong investment activity. Q3 marks the 19th consecutive quarter of uninterrupted growth, confirming that the cyclical backdrop remains stable despite softer external conditions.
Personal consumption, the largest component of GDP, rose 1.9% YoY in Q3, below the 4.0% YoY increase seen in Q2. On a QoQ basis, household consumption fell 3.6% which is mostly seasonal, but the underlying deceleration is real. In the nine-month period, households spent EUR 29.8bn, up 2.5% YoY. This aligns with our macro outlook, which shows the labor market is still healthy, but wage growth is normalising, and the contribution of foreign workers is gradually declining. With public wage growth expected to moderate in 2026 and private sector wages unlikely to accelerate significantly, personal consumption is shifting from being a strong driver of growth to a more neutral element of the overall macro mix.
Croatia’s real GDP development YoY (Q1 2020- Q3 2025)
Source: Croatian Bureau of Statistics, InterCapital
Government spending increased 3.8% YoY in Q3, which represents an acceleration after Q2 print of 3.3% YoY. In the first nine months of the year, the General government spent EUR 11.5bn, which is 4% higher than the same period in 2024. The quarterly fluctuations are mostly technical and reflect seasonality rather than a shift in policy stance. As highlighted in our projections, the fiscal impulse is coming much more from public investment than from government consumption. The 2026 budget points toward continued caution on wage dynamics but not toward cuts. Government spending, therefore, remains steady and predictable. It supports growth, but no longer moves the needle in the way it did in 2023 and 2024.
Gross fixed capital formation once again stood out as the strongest and most reliable pillar of growth. Investment rose 7.5% YoY in Q3 after 4.9% in Q2 and 5.8% YoY in the 9M period, reaching close to EUR 14b. The 5 % QoQ drop reflects normal seasonal timing rather than any weakening. Croatia continues to operate with one of the highest investment-to-GDP ratios in Europe. Public investment remains dominant, supported by EU-funded rail projects worth around EUR 6bn through 2030. When looking at EU funding to Croatia and GDP movement, it is closely correlated, and will be in the coming period. On the private side, the investment cycle is still active with notable projects such as the EUR 380m cargo terminal in Rijeka and the LNG terminal expansion in Omišalj. Investment, therefore, remains the anchor of GDP and the segment that provides the clearest forward-looking support for continued growth into 2026.
Exports fell 1.1% YoY in Q3 as services weakened, while goods held up better. Goods exports grew 4.1% YoY in Q3 and 5.9% YoY in the 9M period, meaning they remain a bright spot, but the pace is slower than earlier in the year because softer European industrial production is reducing new orders and preventing stronger growth. With European industry still subdued and tourism shifting toward a lower volume but higher value structure, exports will likely remain a softer and more uneven contributor to GDP in the coming quarters. Services exports declined 4.6% YoY in Q3 and 3.5% YoY in 9M, reflecting a tourism season where arrivals and overnight stays were largely flat, a sign that the tourism data has normalised, although higher value-added services are partly offsetting weaker volumes.
Imports rose 2.4% YoY in Q3 and fell 2.1% QoQ. For the 9M period, total imports rose 3.6% YoY with both goods and services contributing. Goods imports increased 2.3% YoY, and services imports rose 10.8% YoY. Seasonal effects drive much of the quarterly movement, but the broader trend remains unchanged. Croatia maintains a structurally wide merchandise trade deficit, which reached EUR 18.8bn and roughly 22 percent of GDP in 2024. Although this is still largely offset by the services surplus driven by tourism, the external balance is now stabilising at mild deficit levels, which is consistent with our medium-term expectations.
Taken together, the Q3 and 9M data show that Croatia’s economic backdrop remains meaningfully stronger than that of the wider region. While the Eurozone is projected to grow at roughly 1.3% in 2025 and 1.2% in 2026, Croatia’s trajectory of around 2.9% in 2025 and 2.6% in 2026 places it firmly among the faster-growing EU members, supported by stable domestic demand and a macro framework that continues to deliver above trend performance. With nominal growth near 6% and public debt expected to fall toward 57.4% of GDP in 2025 and 55.0% in 2026, Croatia maintains one of the most resilient and stable growth profiles in the EU, with a macro structure that remains balanced and supportive of medium-term expansion.