Croatia fails to reap fruits from EU

ZAGREB, June 29 (AFP): One year ago, Croatia joined the European Union with great fanfare, sparking hopes that membership of the rich 28-nation bloc would transform the fortunes of the tourism-dependent economy.

But as the anniversary looms, the hoped-for boom has largely failed to materialise.

Croatia remains one of the bloc's weakest economies, mired in a seemingly never-ending recession that has pushed unemployment to 20 per cent -- half of the country's youth are without a job.

The Adriatic country of 4.2 million people has seen its economy contract for the past 10 quarters and only Greece -- which bore the brunt of the eurozone debt crisis -- suffered a bigger fall in output from 2009 to 2013.

In the first quarter of this year, the economy shrank by 0.4 per cent compared to the same period last year, before Croatia joined the bloc.

The centre-left government led by Social Democrat Prime Minister Zoran Milanovic had high hopes that EU membership would boost foreign investment in the former Yugoslav republic, which proclaimed independence in 1991.

But compared to a year before last July's EU accession, Croatia saw a 60-per cent drop in foreign direct investment in 2013.

Experts say investors are scared away by frequent changes in legislation, high business charges, rigid labour laws and investment insecurity.

Croatia's central bank ranks the country the second-worst in the EU after Greece when it comes to business climate.