Gokce Celik, UniCredi's senior economist for CEE, said growth rates of between 2% and 3% exceeded the expected average for Western European countries. She also emphasised the challenges businesses may face, with the primary risk being the potential imposition of tariffs by the United States.
Growth is expected to be driven predominantly by domestic demand, supported by continued increases in employment and real wages. Significant contributions will also come from public investments, based on national recovery and resilience plans, as well as funds from the 2021-27 financial framework. Foreign direct investment is also anticipated to play a crucial role in economic growth.
As for inflation, although it will continue to decelerate, reaching the European Central Bank’s (ECB) target level of around 2% may only occur by the end of 2026.
"In Croatia, we expect economic growth of around 3.3%, which would maintain Croatia as one of the fastest-growing economies in the EU and CEE, as has been the case in recent years. The main driver of this growth is expected to be domestic demand, supported by rising real incomes, personal consumption, strong absorption of EU funds, and a gradual recovery in private investments," said Hrvoje Dolenec, chief economist at Zagrebačka banka (ZABA), a member of the UniCredit Group.
In the context of Croatia's local elections scheduled for mid-year, Dolenec pointed to an expected increase in public spending.
According to him, the biggest risk for the region, including Croatia, is the German economy and the potential impact of U.S. tariffs on the German automotive industry. A further crisis in Europe’s largest economy would primarily negatively affect Croatian tourism, leading to a decline in arrivals and nights by German tourists, he said.
Inflation in Croatia is projected to average 3% in 2025, with monthly spikes potentially reaching around 4%. Dolenec said regulated prices for electricity, gas, and fuel were still in effect, but could be lifted at some point.
Financial support for SMEs in 2025 amounting to €2.3 billion
Teodora Petkova, UniCredit Group's director for CEE, referred to a report by former ECB president Mario Draghi on European competitiveness, which reveals that Europe lags behind the U.S. and China in innovation and productivity. The annual investment gap in research and development compared to U.S. companies is estimated at €270 billion.
One of the report's recommendations is further simplifying access to financing for SMEs and promoting innovation and scalability, Petkova said.
The UniCredit Group announced the launch of a new round of the "UniCredit for CEE" initiative for 2025, aimed at helping SMEs enhance productivity and competitiveness, as well as build sustainable business models through innovation and the adoption of technologies. Thanks to partnerships with over 20 international and local institutions and relevant authorities, more than 9,000 small businesses in CEE can receive financial support totaling €2.3 billion.
A UniCredit research showed that SMEs play a vital role in the CEE economies, contributing more to GDP than large enterprises. However, they exhibit lower productivity compared to larger companies, and one of the measures to address this issue is improving access to financing.