"Looking at overall bilateral economic relations between the two countries, which are relatively modest, and the fact that Croatia has been in the European Union since 2013, according to our estimates the United Kingdom's exit from the European Union should not have considerable consequences and a direct effect on the Croatian economy and the operation of Croatian businesses," the HGK said.
Trade with the UK accounts for between one and two percent of Croatia's total exports and imports, and British tourists generate about 4.5% of foreign currency revenues from tourism. That's why the HGK believes that Brexit and slower demand from the British market should not have a serious impact on the Croatian economy but could affect the operation of individual Croatian businesses, such as exporters of pharmaceutical products which account for 15% of Croatian exports to the UK.
The HGK mentioned possible secondary effects as a result of delays in investment projects, the possible introduction of visas or other restrictions on EU citizens for doing business on the British market and possible barriers to cross-border services provision.
An indirect impact is also possible as a result of an expected slowdown in growth in EU member states that are important trading partners to Croatia, such as Germany, Italy, Austria and Slovenia, but it is expected to be limited.
Bilateral UK-Croatia relations
The average share of the UK in Croatia's total trade has ranged between 1.2 and 1.7% in recent years. In 2018, the UK was Croatia's 18th strongest trading partner with a share of 1.3%.
In 2018, Croatia-UK trade totalled €514.2 million, increasing by 8.2% from 2017; Croatian exports stood at €218.4 million. The UK is Croatia's 15th largest export market.
On the other hand, imports from the UK reached €295.8 million in 2018, making the UK Croatia's 20th largest import market.
In the first three quarters of 2019, Croatia generated €852 million in revenues from services exports to the UK, while services imports reached €167.8 million.
The UK was the eighth largest investor in Croatia between 1993 and the end of 2018, investing a total of €1.03 billion. The most significant investment was made in 2015 when British American Tobacco invested €505 million in the purchase of the Rovinj tobacco factory.
The position of British investors in Croatia will not change with the UK's departure from the EU given that foreign investors in Croatia have the same rights as domestic ones, regardless of whether they come from the EU or third countries, the HGK said.
According to data supplied by the Croatian Bureau of Statistics, 821,114 British tourists visited Croatia in 2018, an increase of 9.4% over 2017. They accounted for 5.0% of all tourists that year and generated 4,177,988 overnight stays, up 9.7%.