December 2, 2022

Croatia approved to join Eurozone amid demographic collapse and a spotty recovery

European Union regulators certified Croatia’s eligibility to adopt the euro next year, reports the WSJ’s Tom Fairless. The European Commission said it would propose that Croatia join the eurozone in January 2023, a decision the region’s governments are expected to approve at a meeting in July.

Bulgaria, which entered the exchange-rate mechanism along with Croatia, didn’t meet all the criteria to join, the ECB and European Commission said. With a 2022 per-capita GDP of roughly $17,000 Croatia will become the poorest eurozone member. 

Croatia’s economy has been one of the most dynamic in the Eurozone in recent years, but the loss of independent monetary policy, which countries like Poland credit for their strong economic performance, risks exacerbating Croatia’s challenges and undermining growth. The country has faced a mix of high debt and deficits and low productivity similar to that which triggered Greece’s sovereign debt crisis in 2009.

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