Standard & Poor's has increased Croatia's long-term sovereign credit rating by a single notch to 'A' and set the outlook to stable, the rating agency announced on Monday. The change marks the sixth upward revision to Croatia's rating in about eight years and represents the highest level S&P has assigned the country to date.
S&P identified a solid and resilient economic outlook as the central rationale for the upgrade. In its assessment, the agency projected that Croatia will achieve average annual growth of 2.7% during the 2026-2029 period.
Beyond the growth projection, S&P pointed to policy and institutional developments that contributed positively to the rating decision. The agency cited Croatia's integration efforts and reforms associated with the Recovery and Resilience Facility as constructive factors. It also noted the country's upcoming accession to the OECD as an additional rating positive.
The move extends a multi-year trend of improving credit assessments that began around 2018. With this action, S&P's rating sits one notch higher than the ratings currently assigned to Croatia by the other two major credit-rating firms, Fitch and Moody's, which remain lower.
Analysts and market participants will observe how the new rating interacts with other ratings and market perceptions, given that S&P's evaluation now stands as the highest on record from that agency while differences remain across the major raters.
Summary
S&P upgraded Croatia's sovereign credit rating by one notch to 'A' and returned the outlook to stable. This is the sixth upgrade in roughly eight years and the highest rating S&P has given Croatia. The agency highlighted a solid and resilient economic outlook, projecting average growth of 2.7% from 2026-2029, and cited reforms tied to the Recovery and Resilience Facility and upcoming OECD membership as positives.
Key points
- S&P raised Croatia's rating by one notch to 'A' and set a stable outlook.
- This is the sixth upgrade in about eight years and represents S&P's highest recorded rating for Croatia.
- S&P projects average growth of 2.7% for Croatia between 2026 and 2029 and cites Recovery and Resilience Facility-related reforms and upcoming OECD membership as supportive factors.
- Sectors to watch given the rating change include sovereign debt markets and domestic financial institutions, which typically monitor sovereign credit assessments closely.
Risks and uncertainties
- Other major rating agencies, specifically Fitch and Moody's, continue to assign lower ratings to Croatia; divergence across agencies creates uncertainty about broad market perceptions.
- The upgrade is linked to S&P's projected average growth of 2.7% for 2026-2029; if actual growth deviates from that projection, the factors underpinning the upgrade could be reassessed.