Croatia ranks first worldwide in terms of tourist spending to GDP ratio

Croatia ranks first worldwide in terms of tourist spending to GDP ratio
By Carmen Simion in Bucharest June 12, 2018

Croatia ranked first in terms of tourism spending as percentage of GDP, with tourism worth 18.8% of its GDP, or around $9.6bn, in 2016, a report from consultancy network UHY, which analysed 34 economies around the globe, showed.

The rate is significantly above the 2.1% rate in Europe and the 0.7% rate in emerging markets.

"Tourism is the most important sector in our country and every year has a significant increase of more than 10%. Additional increases are expected this year, especially due to large investments in Zagreb, Split and Dubrovnik airports which doubled their capacities and new terminals can receive a total of 11.5 million passengers a year," Helena Budisa from UHY HB EKONOM in Croatia, said.

"The government initiatives have proved vital in nurturing such a critical industry, including charging lower VAT on hotels and accommodations, as well as giving tax breaks on food and accommodation for seasonal staff who are necessary for maintaining top tourism services,” she added.

In order to cope with increasing demand in the sector, the Croatian government has recently increased the quota of foreign workers allowed to work in the country. Tourism Minister Gari Cappelli has recently warned the number of vacant jobs in the tourism sector has significantly increased this year and is set to grow as the country expects another successful tourism season.

The UHY study also revealed that the European economies outperform in generating income from tourism, but growth in tourist spending is twice as fast in emerging markets as they close the gap.

On average, emerging markets saw tourist spending increase twice as fast as European economies over the past two years (2.2% compared to just 1.1% growth for Europe). The analysis explains this by the inability of European economies to upgrade their tourism infrastructure as fast as many emerging markets. In Croatia, tourist expenditure increased 9.1% in the last two years.

In Poland, spending increased by 4.8% in the last two years, while in Romania it went up only by 1.1%. Conversely, in Russia tourist expenditure dropped 7.5%.

The study also revealed that tourist expenditure represented 2.3% of Poland’s GDP in 2016, or $10.98bn.

The percentage is much smaller in Romania, at only 0.9% of the country's GDP, or $1.73bn. Tourist numbers have been growing rapidly in recent years, supported by Romanians' rising disposable incomes. However, their number remains small compared to its regional peers.

In Russia, tourist spending represented 0.6% of the country’s GDP.