Craotia has been doing quite well in the last few years. GDP/Capita rose nicely from 13 600 in 2014 to 15 900 in 2018. Inflation is in line with much of the rest of Euroland at around 1%. Unemployment is at a record low of 7.5%.
However, government debt/GDP is quite high at 74%. With the economy going so well, tax income must be rising, but it would still be good if the government would be seen pruning dead wood in government expenditure. EU growth prospects are stable, so within a time frame of three years there is enough time to bring the government debt/GDP ratio down sharply. Apparently, the market expects this to happen, as the 10 year government bond rate has receded from over 2% to a record low of 1.24% in July 2019. This is an excellent opportunity to roll over government debt at lower cost, reducing the debt/GDP ratio even more.
Politically, this is a positive signal. It says EUR is an attractive option, in the face of opposition to the currency in the government of nearby Italy. If the government succeeds in reducing its debt, Croatia should be a very attractive candidate. EUR should strengthen the most important sector of the Croatian economy: tourism. Its coast line should be the first to profit.
Peter