EU Financial Instruments and Policy Reforms Set to Propel Croatia’s Competitiveness Amid Regulatory and Digital Gaps

EU Financial Instruments and Policy Reforms Set to Propel Croatia’s Competitiveness Amid Regulatory and Digital Gaps

(IN BRIEF) In 2024, Croatia’s economy grew steadily, fueled by significant EU funds, the adoption of the euro, and robust financial support from instruments like EFSI and InvestEU. However, major challenges persist, including a high percentage of exporters (84%) facing diverse EU regulatory requirements, lagging digital adoption compared to the EU average, and high energy costs. A recent conference in Zagreb, co-organized with the Croatian National Bank, examined these issues through the lens of the EIB Investment Survey 2024 and the EIB Investment Report 2024/2025. The discussions highlighted a strategic framework that emphasizes market integration, regulatory simplification, leveraging European strengths such as green leadership and social inclusivity, and maximizing public-sector support to attract private co-investors. Key speakers, including EIB Vice-President Teresa Czerwińska, Croatian National Bank Governor Boris Vujčić, Deputy Prime Minister Marko Primorac, and EIB Chief Economist Debora Revoltella, stressed the importance of diversified financing solutions to support innovation and sustainable investments. The conference also underscored that, despite proactive measures to reduce emissions, Croatian firms need to invest more in digital transformation and sustainable technologies to remain competitive in a challenging global environment.

(PRESS RELEASE) LUXEMBOURG, 18-Mar-2025 — /EuropaWire/ — Croatia’s economic progress in 2024 was bolstered by substantial EU funding, the adoption of the euro, and key financial instruments such as EFSI and InvestEU. Despite these positive developments, Croatian exporters face significant hurdles, with 84% reporting challenges due to disparate EU regulations, while digital adoption remains below the EU average (62% versus 74%), and energy costs continue to be a major concern.

At a conference jointly organized with the Croatian National Bank in Zagreb, experts explored the findings from the EIB Investment Survey 2024 for Croatia and the EIB Investment Report 2024/2025. These reports outline a strategic blueprint for overcoming current obstacles and unlocking growth potential. They stress that Europe must focus on three critical areas: enhancing market integration and simplifying regulatory frameworks, leveraging Europe’s inherent strengths—such as green leadership and an inclusive social model—and maximizing the impact of public-sector intervention by deploying targeted support and mobilizing private co-investors.

The robust economic performance witnessed in Croatia in 2024, building on the rebound of 2022-2023, was made possible by coordinated efforts among EU Member States, the Recovery and Resilience Facility, and diverse financial instruments. Moreover, Croatia’s euro adoption has spurred new business opportunities, further accelerating investment momentum. However, in the evolving geopolitical landscape, both the EU and Croatia face an increased urgency to boost competitiveness. According to the latest EIB Investment Report 2024/2025, scaling up innovation in Europe requires unlocking business opportunities through better market integration, streamlining regulations, and investing in innovation on a large scale to attract higher-risk finance.

The EIB Investment Survey for Croatia revealed that the business environment is still challenged by limited access to skilled labor, future uncertainties, and persistently high energy costs. Additionally, while 87% of Croatian firms have implemented measures to reduce greenhouse gas emissions, they lag behind their EU counterparts in investing in advanced digital technologies, sustainable transport, and energy efficiency. The panel discussion at the conference, featuring representatives from the EIB Group, the Zagreb Stock Exchange, HANFA, and local startup founders, delved into the need for deeper financial market integration and alternative funding sources beyond traditional banking, which often restrict early-stage, high-growth investments.

Opening remarks were delivered by EIB Vice-President Teresa Czerwińska, Croatian National Bank Governor Boris Vujčić, and Deputy Prime Minister and Minister of Finance Marko Primorac. EIB Chief Economist Debora Revoltella provided an in-depth analysis of the current economic climate and emphasized that larger, more integrated capital markets are essential for mobilizing finance for innovation and the green transformation. She noted that addressing scale-up financing gaps through diversified instruments like loans, guarantees, venture debt, and private equity is crucial to sustaining Croatia’s growth trajectory.

EIB

The European Investment Bank (ElB) is the long-term lending institution of the European Union, owned by its Member States. Built around eight core priorities, we finance investments that contribute to EU policy objectives by bolstering climate action and the environment, digitalisation and technological innovation, security and defence, cohesion, agriculture and bioeconomy, social infrastructure, high-impact investments outside the European Union, and the capital markets union.

The EIB Group, which also includes the European Investment Fund (EIF), signed nearly €89 billion in new financing for over 900 high-impact projects in 2024, boosting Europe’s competitiveness and security. The EIB Group signed 99 operations totalling €10.98 billion in Italy in 2024, helping to unlock almost €37 billion of investment in the real economy. All projects financed by the EIB Group are in line with the Paris Climate Agreement, as pledged in our Climate Bank Roadmap. Almost 60% of the EIB Group’s annual financing supports projects directly contributing to climate change mitigation, adaptation, and a healthier environment.

Fostering market integration and mobilising investment, the Group supported a record of over €100 billion in new investment for Europe’s energy security in 2024 and mobilised €110 billion in growth capital for startups, scale-ups and European pioneers. Approximately half of the EIB’s financing within the European Union is directed towards cohesion regions, where per capita income is lower than the EU average.

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SOURCE: European Investment Bank