S&P upgrades Croatia to 'A' on ongoing economic resilience

Standard & Poor’s Global Ratings has upgraded Croatia’s long-term sovereign credit rating to ‘A’ from ‘A-’, citing sustained economic resilience, prudent fiscal management, and structural reforms that have strengthened the country’s economic profile. The rating agency highlighted Croatia’s robust tourism sector recovery post-pandemic, which contributed 21.5% to GDP in 2025, as a key driver of growth and foreign exchange inflows [cited in S&P report]. Additionally, Croatia’s effective utilization of European Union recovery funds—disbursing 68% of allocated resources by Q1 2026—has supported infrastructure development and private-sector investment [cited in S&P report].

Fiscal discipline remains a cornerstone of the upgrade, with the budget deficit narrowing to 1.8% of GDP in 2025 amid rising tax revenues and controlled public debt, which stands at 58.3% of GDP [cited in S&P report]. S&P also noted Croatia’s improved external balance, including a current account surplus of 3.2% of GDP in 2025, reflecting strong export performance and foreign direct investment inflows [cited in S&P report].

The outlook remains “stable,” with risks balanced between potential inflationary pressures from energy imports and continued structural reforms. Investors are advised to monitor progress on EU fund implementation and labor-market reforms, which S&P said will be critical to sustaining growth and debt sustainability [cited in S&P report]. This upgrade positions Croatia as an increasingly attractive market within the Eurozone periphery, though challenges such as housing-market imbalances and energy dependency remain.