Croatia has an economy based mostly on various services and some, mostly light industry. Tourism is a notable source of income. The Gross Domestic Product per capita in purchasing power parity terms for 2002 was USD 9,800 or 42.7% of the EU average.

The Croatian economy is post-communist. In the late 1980s, at the beginning of the process of economic transition, its position was favourable, but it was gravely impacted by de-industrialization and war damages.

Main problems include massive structural unemployment followed by an insufficient amount of economic reforms. Of particular concern is the gravely backlogged judiciary system combined with inefficient public administration, especially involving land ownership.

The country has since experienced faster economic growth and has been preparing for membership in the European Union, its most important trading partner.

In February 2005, Croatia implemented the Stabilization and Association Agreement with the EU and is advancing further towards full EU membership. The country expects some major economic impulses and high growth rates in the following next years (currently Croatia suffers most from its high export deficit and considerable debt). Some big trading companies have already taken advantage of the liberalization of the Croatian market. Croatia is expecting a boom in investments, especially greenfield investments.