The Croatian economy is not in a robust state. Foreign debt as a percentage of GDP has soared to over 85%. Accession talks with the EU, due to start on March 17, have been postponed until the government delivers a war criminal to the Hague. GDP growth, forecast at 3% for 2005, lags behind comparable economies such as the Czech Republic (4.2%) and Poland (4.6%), and loss-making state industries, such as ship-building, put substantial strain on a fiscal system that is already under pressure.
Such dire straits are belied by a stroll around the healthy and wealthy-looking capital, Zagreb, and by the vigour of the Croatian banking market. “Apart from tourism, banking and financial services are our only successful industries,” a leading Zagreb lawyer told The Banker. “People say we have too many banks, but they’re still profitable.”
