Regional economic trends show slowing growth and labor shortages

Economic trends across Croatia and Republika Srpska show a mix of slowing growth and persistent labor shortages. In Croatia, GDP growth slowed to 1.7 percent in the second quarter of 2026, marking the lowest rate since the pandemic. While household consumption and investment growth have decelerated, the service sector remains active, with a 4.8 percent increase in turnover. In the Zadar region, employment has risen by 34 percent over the last decade, significantly outpacing the national average.

In Republika Srpska, businesses are increasingly relying on foreign labor to combat a deficit caused by retirees leaving the workforce faster than new graduates enter. Approximately 2,874 work permits were issued to foreign nationals in the first seven months of the year. However, the construction sector reports a slowdown in new building permits due to rising labor costs and worker shortages.

In Montenegro, employers have expressed concerns regarding administrative barriers, noting that proposed regulations requiring Employment Service approval for foreign workers could create further delays compared to more digitized regional neighbors.