The Euro in Croatia and Now
Posted on January 13, 2024 • 4 min read • 674 wordsCroatia's euro adoption: Mixed opinions on economic impact and price increases, navigating challenges with government response and public sentiment.
On January 1, 2023, Croatia officially joined the Eurozone. The kuna, Croatia’s national currency, was abolished and replaced by the euro. The introduction of the euro was a significant milestone for Croatia, but it was also a controversial topic.
Most Croatians were positive about the introduction of the euro. They saw it as a sign that Croatia was a full-fledged member of the European Union. The euro was expected to boost trade and investments, making the country more attractive to tourists.
The first days after the introduction of the euro went smoothly. People adapted to the euro, and there were no major issues with price increases.
But after a few weeks, concerns began to grow. Prices did indeed rise, and people noticed that they could buy less with their money.
The largest price increases were observed for products and services imported from abroad. This was because the prices of these goods and services were expressed in euros. Price increases were also noticeable for products and services produced in Croatia but dependent on imported components.
The price increases had a negative impact on the purchasing power of the Croatian population. With the same amount of euros, Croatians could buy less than with the same amount of kunas.
The Croatian government took measures to limit price increases. Subsidies were provided to businesses to offset cost increases. Tax reductions were also implemented to stimulate purchasing power.
Public opinion on the euro in Croatia has been mixed since its introduction in 2023. While some people welcome the stability and predictability that the euro brings, others have expressed concerns about the associated price increases.
A poll conducted by the Croatian Institute for Public Opinion (IPO) in July 2023 found that 56% of Croatians believe that the euro has had a positive impact on the country’s economy, while 30% believe that it has had a negative impact. However, the same poll found that 42% of Croatians believe that the euro has made life more expensive for them, while only 28% believe that it has made it cheaper.
These mixed feelings are likely due to the fact that the euro has both positive and negative effects on the Croatian economy and population. On the one hand, the euro has made Croatia more attractive to foreign investors and tourists, which has boosted the economy. On the other hand, the euro has also led to price increases for some goods and services, which has reduced the purchasing power of Croatians.
It is still too early to say definitively whether the euro will be a net benefit for Croatia in the long run. However, the early evidence suggests that the euro has both positive and negative effects on the country. Ultimately, the impact of the euro will depend on the ability of the Croatian government to manage the economy in a way that minimizes the negative effects of the euro and maximizes the positive effects.
Here are some additional insights into how Croatians feel about the euro:
Overall, it seems that Croatians have mixed feelings about the euro. While they recognize the potential benefits of the euro, they are also concerned about the associated price increases. The Croatian government will need to carefully manage the economy in the years to come to ensure that the euro is a net benefit for the country.