The Economy of Croatia is a service-based economy, with the service sector accounting for 67% of the total GDP. The preliminary GDP data for 2008 put Croatian GDP at 370.5 billion Croatian Kuna, or just over USD 15,700 per capita, putting Croatia ahead of the EU member states Bulgaria, Romania, Latvia, Lithuania, and Poland. The estimated Gross Domestic Product per capita in purchasing power parity in 2008 was around USD 18,740 or 63% of the EU average for the same year.
Shipbuilding dominates the industrial sector; with exports of over €1 billion annually, shipbuilding accounts for over 10% of exported goods. Food processing and chemical industry take significant portions of industrial output and are responsible for significant portion of exported goods. Industrial Sector represents 27% of Croatia’s total economic output, and agriculture represents 6%.
Croatian agricultural sector subsists from exports of blue water fish, which in recent years experienced a tremendous surge in demand, mainly from Japan and South Korea. Croatia is a notable producer of organic foods and much of it is exported to the EU. Croatian wines, olive oils and lavender are in particularly high demand.
Tourism is a notable source of income, particularly during the summer months but also more recently from winter months, due to an increase in popularity of snow sports such as skiing. With over 10 million foreign tourists annually, tourism generates revenue in excess of €7 billion. Croatia is ranked amongst the top 20 most popular tourist destinations in the world, and was voted the world's top tourism destination of 2005 by Lonely Planet.
Trade has finally begun to play major role in Croatian economic output. In 2007 Croatia exported goods in value of USD 12.84 billion (24.7 billion including service exports). Croatia has stable functioning market economy with the strong and stable currency, the Kuna.
Croatia and Slovenia, the two westernmost republics in what was formerly known as Yugoslavia, alone accounted for nearly half of the total Yugoslavian GDP, and this reflected in overall living standard which in Croatia's case was over 50% above the Yugoslav average, and close to 90% in Slovenia. Nevertheless, starting in the late 1980s, at the beginning of the process of economic transition, Croatian economy suffered as result of de-industrialization, war destruction as well as losing the markets of Yugoslavia and the SEV.
Persistent economic problems still remain: a rather elevated unemployment of 9.6% in 2007, as well as slow progress of economic reforms. Of particular concern is the heavily backlogged judiciary system, combined with inefficient public administration, especially regarding issues of land ownership and corruption in public sector and political sectors. Unemployment is regionally uneven: it is very high in eastern (Slavonia and parts of Dalmatia), nearing 20% in some areas, while relatively low in the northwest and larger cities, mainly Istria, Kvarner, and the Zagreb area, being between 3 and 7%. Unemployment has been constantly declining by 5% over the last 7 years.
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