S&P upgrades Croatia to 'A' on ongoing economic resilience
TL;DR
S&P upgraded Croatia's credit rating to 'A' due to economic resilience, fiscal discipline, and structural reforms, driven by tourism recovery and EU fund utilization. The stable outlook balances risks from inflation and ongoing reforms.
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.
