BMI View: Croatia's financial services sector is among the youngest and smallest of EU markets, thoughits banking industry is among the largest of the Western Balkan region relatively to GDP. A rapidexpansion of the financial sector during the 1990s and at the start of the century was curtailed during thecountry's six-year recession following the global crisis. Nonetheless, the outlook is now more promising asa brighter macroeconomic backdrop and an improving regulatory climate with the EU framework shouldsupport further development over the forecast period.
Croatia's banking sector - by far the most important in the financial services industry - is dominated byforeign players, and particularly the local units of large Italian and Austrian multinationals. This cloutsupported stability during a long recession, and the outlook is now improving as economic growth returnsand demand for credit recovers. The country's accession into the EU in 2013 has also prompted positivechanges in the regulatory framework, bringing it gradually into line with regional standards.