Poverty & Equity Brief April 2025 CROATIA Over the past decade, Croatia has made significant progress in reducing poverty, with real per capita household income growing at an average annual rate of 4.7 percent, leading to a decline in the poverty rate at the upper-middle-income line (US$6.85 a day at 2017 PPP) from 8.1 percent in 2012 to 1.9 percent in 2022. This was largely driven by pension and labor incomes, each contributing around one third to poverty reduction. However, recent rising food and energy prices have threatened these gains, though government support—mostly untargeted—has helped cushion the impact. Despite this progress, 19.3 percent of the population still lives below 60 percent of the median national income, giving Croatia the seventh highest at-risk-of-poverty (AROP) rate in the EU among member states with available data. Vulnerable groups— including the elderly, low-educated individuals, the unemployed, and marginalized communities like the Roma—remain at high risk and in need of targeted assistance to address persistent challenges. Following the COVID-19 pandemic and severe earthquake damage in March and December 2020, the economy rebounded strongly, with growth continuing into 2023 and 2024, driven by strong domestic demand and rising real disposable income. However, Russia's invasion of Ukraine has sustained pressure on food and energy prices, eroding real purchasing power, particularly for the poorest households. Despite government measures such as price caps, lower VAT on essential items, and social transfers, many households continue to struggle. While sustained employment and wage growth are expected to reduce the at-risk-of-poverty rate in the coming years, persistent high inflation is likely to offset some gains, slowing overall progress. Croatia has made progress in shared prosperity, yet persistent inequalities among different population groups continue to limit broader economic gains. Despite a Gini index of 29.7 in 2022 that places income inequality below the EU average, significant disparities remain. Rural poverty (AROP) rates are twice as high as rates in cities—25 percent in rural areas compared to 19.4 percent in towns and suburbs, and 12.3 percent in cities—with nearly half of the country’s poor living in rural areas. Furthermore, although education levels have improved, about 60 percent of youth under 35 have not progressed beyond secondary education, perpetuating generational inequality, while gender gaps further exacerbate disparities. Croatia ranks 20th in the 2023 EU Gender Equality Index, which is 9.5 points below the EU average, with women disproportionately burdened by unpaid care and domestic work and underrepresented in high-paying sectors. $2.15 Poverty Rate $6.85 Poverty Rate Gini Index Prosperity Gap 2022 2022 2022 2022 0.3% 1.9% 30.0 1.2 Poverty Rate Inequality 70 8 60 50 6 Poverty Rate (%) Gini Index 40 4 30 20 2 10 0 0 2010 2015 2020 2010 2015 2020 Poverty at Different Lines Poverty Line Number of Poor Rate Year (Thousands) (%)   National Poverty Line 744.1 19.3 2022         International Poverty Line ($2.15/day) 13.2 0.3 2022         Lower Middle Income Class Poverty Line ($3.65/day) 20.5 0.5 2022         Upper Middle Income Class Poverty Line ($6.85/day) 74.7 1.9 2022         Multidimensional Poverty Measure   0.5 2022         Group and Multidimensional Poverty Poverty by Group Poverty Rate (%) Multidimensional Poverty Components (% of Pop.)   Urban population 1.4 Daily income less than US$2.15 per person 0.3 Rural population 2.9 At least one school-aged child is not enrolled in school N/A Males 2.0 No adult has completed primary education 0.2 Females 1.9 4 No access to limited-standard drinking water 0 0 to 14 years old 3.2 No access to limited-standard sanitation N/A 15 to 64 years old 1.8 No access to electricity 0 65 and older 1.6 Without education (16+) 8.8 Primary education (16+) 5.3 Secondary education (16+) 1.9 Tertiary/post-secondary education (16+) 0.5 Note: N/A denotes a missing/removed value, while N/A* refers to a value which was removed due to having fewer than 30 observations. The rates in the Poverty by Group table above are shown at the $6.85 upper-middle income line. Data for the Poverty by Group table is derived from a 2022 survey and data for the Multidimensional Poverty Components table is derived from a 2022 survey. Poverty Data & Methodology The national poverty line in Croatia follows the European Union standard, which is set at 60 percent of adult equivalized median disposable income after social transfers. The World Bank's international poverty rates are based on an absolute threshold that reflects how the world's poorest countries define a minimum threshold of living standards, adjusted for purchasing power parity (PPP) and for national inflation. In 2022, the 2017 PPP was adopted to reflect changes in prices across the world. The quality of data for monitoring welfare in Croatia is high and surveys are run on a yearly basis. Access to microdata is granted by EUROSTAT after approval of an accredited organization's research proposal by all individual member states. Harmonization The numbers presented in this brief are based on the ECAPOV database. The ECAPOV micro database was established in 1998 to support a regional poverty report. The database is managed and harmonized by the Europe and Central Asia Team for Statistical Development (ECATSD). ECAPOV includes 29 countries, with an average of 8 surveys per country. Recently, EU-SILC data for EU countries, received from Eurostat, have been added to the collection. Each survey in ECAPOV is organized into 6 modules following the Global Monitoring Database (GMD) harmonization guidelines, including the construction of the welfare aggregate which is used for Global Poverty Monitoring. Terms of use of the data adhere to agreements with the original data producers. Europe & Central Asia Poverty Economist: Nadia Belhaj Hassine Belghith