Croatia’s entry into the euro zone – where did this decision come from?“I would like to congratulate Minister Zdravek Marić and all of Croatia, which is joining the euro area as its twentieth member. Adopting the euro is not a race, but a responsible political decision. Croatia has successfully met all required economic criteria and will start using the euro from January 1, 2023.” These words were recently spoken by the Czech Minister of Finance Zbyněk Stanjura.The Council of the European Union has officially adopted the last three legal acts necessary for the introduction of a new currency in the Balkan country.Many people wonder, however, why the Croatian government decided to do so procedure. This is due to the many benefits brought by the introduction of a common currency used in most European countries. Euro is the definition of convenience because it allows you to pay quickly and without commission in nineteen (and twenty at the beginning of 2021) countries. The common currency unit is also of great importance for the country’s economy, as it significantly improves international trade. Moreover, the introduction of the euro strengthens the country’s position in the ranking of member countries, which also has a beneficial effect on many sectors of the economy. One of the three acts adopted set the exchange rate at 7.53450 kuna per 1 euro, the Council said.
Croatian coins and euro – will there be inflation?The government of the European Union and the National Bank of Croatia believe that the country is fully ready for Croatia to join the euro zone with other member states. However, a question arises – will the adoption of the common EU currency not have an increasing impact on the inflation process? It is difficult to answer this question unequivocally because the forecasts are not yet fully developed. Here we can refer to an analytical study carried out on the basis of other countries that once entered the euro zone, which clearly shows that changing the currency has a negligible impact on growth prices of services, products and fuel. “The reforms undertaken by the Croatian government in recent years have strengthened the economy and paved the way for Croatia to adopt the common currency. It is obvious that joining the euro zone is the right decision for the country, its businesses and citizens, as well as various economic sectors, such as tourism,” these are the words of MEP Muresan, who was the rapporteur of the project. A positive response from MEPs may be a harbinger of success that will result in quick adoption of the currency. Moreover, it is worth bearing in mind that nowadays, rising inflation is a common economic phenomenon throughout Europe, due to the situation in the world – we are talking about the pandemic and the attack of Russian troops on Ukraine.
How will Croatia’s adoption of the euro affect tourism?The introduction of the euro changes many sectors of the country’s economy, which will probably also affect Croatia. One of them is tourism, which is a key source of profit for this country.The tourism branch in the Balkan country is extremely developed and generates about 20% of GDP. Will the euro in Croatia affect any of the above-mentioned sectors? Analysts assume this is a possibility. This is due to the position of the Croatian kuna, which is low in the ranking on the currency market. One Kuna is worth 0.13 euros, while 1 euro is 7.55 kunas. So what does this mean for the tourism industry? At the moment, the prices of products and services are relatively low, which attracts a lot of supporters of low-budget travel. Nevertheless, specialists speculate that spending a holiday in Croatia may prove unprofitable for many nations. The reason is the price increase that may occur after the Balkan country adopts the euro. Another issue is the need to convert the payment unit into the European currency. However, for the countries that belong to the euro zone, this is not a serious problem, because they will have the opportunity to pay in the same currency unit in which they earn. The process may be felt by countries that have their own currencies. This includes, among others: about Poland, where the value of money is extremely low – 1 zloty is worth 0.21 euro.
Current state of the real estate market in CroatiaAnyone who has ever been to Croatia knows that it is an exceptionally charming country that is very popular among tourists. No wonder – sandy beaches and fabulous landscapes attract people like a magnet. Investors, however, look at this country through a slightly different prism. Croatia is a country besieged by real estate agents. More and more people are also deciding to buy property in this country. This is due to the fact that Croatia is characterized by relatively cheap apartments and houses, especially in regions where tourism is not a profitable sector. Therefore, it cannot be denied that the real estate market is very developed in this country. Not only Poles are the recipients of available advertisements, as this group also includes people of different nationalities, including: Germans, Austrians and British. For Polish investors, purchasing a Croatian property is a profitable increase in capital. Most of them prefer investing in foreign real estate due to the weak position of the Polish zloty on the international market and inflation, which causes cyclical loan interest rates to increase, and renting real estate to a third party does not bring large profits.
Real estate market in Croatia and the euroThe real estate sector is very optimistic, but what will it look like when Croatia joins the euro zone? It is difficult to assume one scenario because it is a new situation that must first be thoroughly analyzed by economists and analysts over the course of events. The conclusion that can be drawn at this point is the assumption that investing your capital in real estate in the Balkans after the currency change will still be a great investment, taking into account the current euro exchange rate in Poland. For Poles, the procedure may turn out to be beneficial because it is likely that during the transition period fewer and fewer Croatians will decide to buy real estate for fear that loan rates will increase and inflation will go up. For this reason, the prices of apartments and houses may gradually decrease to encourage potential investors. If you want to learn more and see their prices houses and apartments in Croatia, please visit our website. NESTOVIA real estate agency is a team of experienced specialists , who constantly research the Balkan market to accurately respond to the needs of their customers.
- Euro zone – why is Croatia joining it?
- How will the introduction of the euro change tourist traffic in Croatia?
- Is it worth investing in Croatian real estate?
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