Croatia Offers Bulgaria Insight on Euro Adoption Challenges and Benefits

In a recent discussion surrounding Bulgaria's impending entry into the eurozone, Croatian officials have conveyed a message of reassurance, emphasizing that the transition could be less daunting than anticipated. Since adopting the euro in January 2023, Croatia has experienced an uptick in inflation; however, experts argue that this trend is largely attributable to external factors rather than the currency switch itself.

As Bulgaria prepares for its euro adoption, scheduled for July 2025, public sentiment has been marked by apprehension, fueled by fears of rising prices similar to those experienced in Croatia. Thousands of Bulgarians have taken to the streets in protest, concerned that the euro will exacerbate inflation.

Croatia, which joined the eurozone under challenging economic conditions, has reported inflation rates peaking at over 13% post-adoption, yet experts assert that this inflation is not solely a consequence of euro adoption. Petar Sorić, an economist from the Faculty of Economics and Business at the University of Zagreb, noted that Croatia faced severe inflationary pressures even before adopting the euro, stemming from a series of economic disruptions, including the COVID-19 pandemic.

"Croatia was the only country that joined the euro area in the conditions of serious inflationary pressures," Sorić noted, indicating that the perception of higher inflation may be misattributed to the currency changeover. Furthermore, Fran Galetić, also from the Faculty of Economics and Business, highlighted that while fears of price increases are partly justified based on past experiences in the region, Bulgaria may benefit from a more stable inflation outlook compared to Croatia’s historical context.

In recent years, Croatia has recorded significant economic growth, boasting a GDP increase of 3.8% in 2024, buoyed by a robust tourist sector. This growth is complemented by a decrease in unemployment rates, which are the lowest since 1996. Additionally, the Croatian National Bank has reported that wages have risen over 30% since the euro adoption, contributing to an improved standard of living for many citizens.

Ana Šabić, director of the Croatian National Bank’s European Relations Department, characterized the euro adoption as a “complete success story,” citing substantial savings on currency conversion fees and a reduction in credit risk premiums. The Croatian government’s proactive measures, such as implementing a dual pricing display period prior to the euro's introduction, aimed to mitigate consumer fears regarding price hikes. However, some retailers exploited this transition, leading to public demonstrations against perceived price gouging.

Experts agree that while challenges remain, the transition to the euro offers significant long-term advantages. The experience of Croatia serves as a cautionary tale for Bulgaria, which must navigate similar economic waters. As Bulgaria approaches its euro adoption date, it is poised to learn from Croatia's experiences, particularly regarding public sentiment and inflationary pressures. The overarching narrative suggests that, despite immediate concerns, the benefits of eurozone membership may ultimately outweigh the transitional challenges, paving the way for a more integrated and stable economic future for both countries.

In conclusion, as Bulgaria prepares to adopt the euro, it can take heed of Croatia's journey, balancing caution with optimism. By addressing public anxieties and learning from neighboring experiences, Bulgaria may chart a path that leverages the benefits of euro adoption while mitigating potential pitfalls. The coming months will be crucial as Bulgaria seeks to ensure a smooth transition into the eurozone, fostering economic stability and growth for its citizens.