Despite numerous corruption scandals, the center-right coalition government, led by Andrej Plenković of the Croatian Democratic Union, has maintained a stable majority. This was aided by the fragmentation of the opposition. The main opposition party, the Social Democratic Party, experienced a split, as did the right-wing populist and nationalist Homeland Movement.
Corruption and the low efficiency of the judiciary remain problems that hinder Croatia’s progress and contrast with its relatively good macroeconomic indicators. Unemployment has remained low, while inflation rose in 2022, due to increased public spending during the pandemic and rising energy prices triggered by Russia’s invasion of Ukraine.
The government has maintained a balanced budget policy but has failed to implement any significant structural reforms, such as in public administration or health care. In January 2023, Croatia joined the euro area and the Schengen area, which are expected to have a positive impact on its macroeconomic position and create new investment and tourism opportunities.
