Croatia Freight Transport Report 2007

The chairman of the board of the Rijeka-Zagreb Highway company, Jurica Prskalo, and the director for transport at the European Bank for Reconstruction and Development (EBRD), Riccardo Puliti, in July signed a EUR50mn loan contract for the completion of the highway connecting Croatia's largest seaport and its capital. The project envisages the construction of 11 bridges, nine tunnels and facilities. The section is expected to be opened for traffic in late 2008 and will finally complete construction on the Rijeka-Zagreb highway, which began about 30 years ago. In other words, despite a fiscal squeeze, with EU help, Croatia is moving ahead with motorway investments to improve the road haulage network across the country. In our new Croatia Freight Transport Report, BMI concludes that road freight tonnage will grow at an annual average of 5.0% over the next five years.

Various factors support this prediction. BMI is forecasting a period of steady growth in Croatia as the country focuses on EU accession over the rest of this decade. We expect that GDP will rise at an annual average of 4.6% for the next five years, a solid rate that will nevertheless be marginally lower than the 4.7% figure achieved over the preceding five years. This pace of development will be consistent with favourable freight transport industry development, as multi-modal links to the EU are improved and eastwest pipeline opportunities are developed. Croatia's development pattern will rely on the country's freight transit role.

Total freight carried fell as a result of the regional wars in the 1990s and has been recovering in subsequent years. Road freight is now dominant, with a 47.3% share of the total, followed by maritime freight with 31.6%. Rail is in third place with 11.0% of the total, followed by pipeline throughput in fourth, with 9.1%. Looking forward, we forecast that overall Croatian freight tonnage will grow by an average of 4.8% per annum, a little ahead of GDP. Growth will be led by airfreight (5.7%), road haulage (5.0%), rail (4.7%) and pipelines (4.6%), in that order. Croatia scores a total of 35 in our freight business operating environment rating out of a theoretical maximum of 70, which places it at the lower end of the ranking among its European peers. For comparison, the average score for the emerging European economies we cover is 39.1.

For the 2006-2010 forecast period, we expect the transport and communications sector to continue outpacing the economy as a whole. It will achieve average annual growth of 5.2%, versus 4.6% for overall GDP. The total value of transport and communications GDP will rise to US$5.4bn in nominal terms by 2010, representing 8.8% of Croatia's GDP.