Croatia's business landscape and GDP remain quite unaffected by the war-related crises, with the country's energy market and tech sectors growing, according to Batarelo Dvojkovic Vuchetich Partner Laurenz Vuchetich.
"War-related issues are expected to have a structural impact on Croatia’s energy market, mainly on renewable energy," Vuchetich begins. "Both regional and international investors are already focusing attention on two key sectors within the renewables group – solar and geothermal energy. The energy market sees demand for a number of corporate power purchase agreements, allowing investors to directly enter into power purchase agreements with off-takers, rather than entering into power purchase agreements with the national energy market regulator." Further, he notes, "the law enables energy communities, where citizen-driven energy activities can contribute to clean energy transitions."
Another major sector that is flourishing in Croatia, according to Vuchetich, is technology. "Croatia excels when it comes to IT developers. Currently, two unicorn-valued companies in the tech sector – Infobip and Rimac – have received significant funds for growth. We are hopeful this might create a similar effect to what Skype had on the Estonian IT sector and ecosystem," he explains. "Interestingly, these enterprises have not received financial support from the state but rather developed their businesses on their own. That is something we are proud of, making us hopeful for the future."
"In addition to that, we just recently received an invitation from the European Commission to join the eurozone from January 1, 2023," Vuchetich adds. "Public opinion and the business community seem to be welcoming the change, although it is interesting to see how the market will respond to prices, especially considering the current inflation rates." According to him, this might create challenges from a consumer protection perspective. "Traders will have an incentive to increase prices, therefore consumer protection bodies should pay close attention to that in the future," he notes.
Vuchetich reports there have not been any major changes in legislation recently. "An amendment to the Croatian Companies Act was adopted, primarily in relation to spin-offs. Companies divesting their assets into a newly formed company through a spin-off procedure are now jointly and severally accountable for all liabilities incurred prior to such a spin-off being effective, regardless of the value of assets acquired and liabilities assumed through the spin-off," he says, noting that it is hard to predict how it will affect the M&A landscape in Croatia.
"Other than that, the crisis has not affected our GDP yet, and the business sector is in much better condition than a few years ago," Vuchetich points out. "We don’t rely on heavy industry as much – but rather on the services business and tourism sector – and that contributes to our well-being so far. We'll have to see how things develop," he concludes.