Emerging Market Croatia's Sudden Explosion

Liam Bailey explains why he couldn’t have an emerging markets blog without covering Croatia.

Almost all the Eastern European countries, especially those with Adriatic coastlines, are benefiting from that coastline, their proximity to established and popular countries and things like entry into the EU and NATO. But on the most part this is not just a sudden explosion, but a path of emergence that began with the break up of the soviet Union and the fall of the Berlin Wall. With one exception: Croatia has and will be a sudden economic explosion.

When the soviet Union collapsed, the Berlin wall fell and the Eastern European states began to see growth, Croatia was at war. Just as Albania’s growth takes on a new pace as they tensions with Kosovo look like finally being resolved, Montenegro’s economy expands upon splitting from Serbia, Croatia’s government has been struggling to bring about economic and political reforms to fully capitalize on the opportunity for growth.

Since Croatia’s recession in 1999 the economy has bounced back as though on a spring, with GDP growing at a solid 3% since 2001, and reached 4.8% in 2006 up from 4.1% in 2005. Croatia is set to gain entrance into the EU in 2009, similar countries in the region have grown massively upon entering the EU, countries like the Ukraine and Estonia.

Being that the country Croatia’s benefits from its proximity to is Italy, one of the strongest markets in the world, both economically and particularly in tourism and real estate sectors, and being that Croatia’s strongest industry is already tourism, a large injection of EU money into the infrastructure and towards boosting the already strong tourism market, could see Croatia set new records for EU spurred economic growth.