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 Before the dissolution of [[Yugoslavia]], the Republic of Croatia, after [[Slovenia]], was the most prosperous and industrialized area, with a per capita output perhaps one-third above the Yugoslav average. Privatization under the new Croatian Government had barely begun when war broke out. As a result of the Croatian war of independence, the economic infrastructure sustained massive damage in the period 1991-92.
 
In 1999, GDP growth has slowed after a period of expansion, and Croatia is facing a recession. This is due mainly to weak consumer demand and a decrease in industrial production.
 
Croatia faces considerable economic problems stemming from: the legacy of longtime communist mismanagement of the economy; damage during the internecine fighting to bridges, factories, power lines, buildings, and houses; the large refugee and displaced population, both Croatian and Bosnian; and the disruption of economic ties.   Inflation and unemployment are rising, and the kuna has fallen, prompting the national bank to tighten fiscal policy. A new banking law passed in December 1998 will give the central bank more control over Croatia's 53 remaining commercial banks. Croatia is dependent on international debt to finance the deficit. A recently issued EURO-denominated bond was well received, selling $300 million, which will help offset economic losses from the Kosovo crisis. Despite the successful value-added tax program, planned privatization of state controlled businesses, and a revised budget with a 7% across that board cut in spending, the government still projects a $200 million deficit for 1999.  Western aid and investment, especially in the tourist and oil industries, would help restore the economy. The government has been successful in some reform efforts - partially macroeconomic stabilization policies - and it has normalized relations with its creditors.
 
The recession that began at the end of [[1998]] continued through most of [[1999]], and GDP growth for the year was flat. [[Economics/Inflation|Inflation]] remained in check and the kuna was stable.   Structural reform has been lagging, however, and problems of payment arrears and a lack of banking supervision continue. The upcoming elections may take HDZ focus off of economic policy. The party has promised two salary increases to public-sector employees before the end of the year which will increase the fiscal deficit.
 
The death of President [[Tudjman|TUDJMAN]] in December 1999, and the defeat of his ruling Coatian Democratic Union or HDZ party in parliamentary and presidential elections in January 2000 has ushered in a new government committed to economic reform but faced with the challenge of halting the economic decline.
 
 <b>[[GDP]]:</b>
 purchasing power parity - $23.9 billion (1999 est.)
 <eod> <sod> 
 Before the dissolution of [[Yugoslavia]], the Republic of Croatia, after [[Slovenia]], was the most prosperous and industrialized area, with a per capita output perhaps one-third above the Yugoslav average. Privatization under the new Croatian Government had barely begun when war broke out. As a result of the Croatian war of independence, the economic infrastructure sustained massive damage in the period 1991-92.
 
Croatia faced considerable economic problems stemming from:
* the legacy of longtime communist mismanagement of the economy;
* damage during the internecine fighting to bridges, factories, power lines, buildings, and houses;
* the large refugee and displaced population, both Croatian and Bosnian; and
* the disruption of economic ties.
 
Inflation and unemployment rose and the kuna fell, prompting the national bank to tighten [[fiscal policy]]. A new banking law passed in December 1998 gave the central bank more control over Croatia's 53 remaining commercial banks. Croatia is dependent on international debt to finance the deficit. A recently issued [[Euro]]-denominated bond was well received, selling $300 million, which helped offset economic losses from the Kosovo crisis.
 
Despite the successful value-added tax program, planned privatization of state controlled businesses, and a revised budget with a 7% across that board cut in spending, the government still projects a $200 million deficit for 1999.  
 
Western aid and investment, especially in the tourist and oil industries, is helping restore the economy. The government has been successful in some reform efforts - partially macroeconomic stabilization policies - and it has normalized relations with its creditors.

The [[recession]] that began at the end of [[1998]] continued through most of [[1999]], and GDP growth for 1999 was flat. [[Economics/Inflation|Inflation]] remained in check and the kuna was stable. However, consumer demand was weak and a industrial production decreased. Structural reform lagged and problems of payment arrears and a lack of banking supervision continued.
Due to the upcoming elections, the HDZ government promised two salary increases to public-sector employees before the end of the year which increased the fiscal deficit.

The death of President [[Franjo Tudjman|Tu&#273;man]] in December 1999, and the defeat of his ruling Coatian Democratic Union or HDZ party in parliamentary and presidential elections in January 2000 ushered in a new government committed to economic reform and halting the economic decline.

The [[Ivica Racan|Ra&#269;an]] government carried out a large number of structural reforms and with tourism as the main factor, the country emerged from recession in 2000. Due to overall increase in stability, the economic rating of the country improved and [[interest rate]]s dropped. As a result of [[coalition]] politics and resistance from the unions and the public, many reforms are still overdue, esp. in the legal system.

Unemployment reached a peak of circa 22% in late [[2002]] due to many overdue bankruptcies. It has since been steadily decreasing, powered by growing industrial production and rising [[GDP]] rather than only seasonal changes (tourism).

Most economic indicators are currently positive (2003), except for the external [[debt]]. The national bank is taking steps to curb further growth of indebtedness of local banks with foreign banks (commonly the same foreign banks that own the local ones).

The country has applied for membership in the [[European Union]]. During the accession, it is expected that agricultural policy will be the biggest stumbling block, as with other recent applicant countries.

''The remaining information is still verbatim from the old CIA World Factbook entry and is likely very much out of date.''
 
 <b>[[GDP]]:</b>
 purchasing power parity - $23.9 billion (1999 est.)
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