While we have seen some setbacks in recent years, most notably in 2023 when total assets under management in the country fell, the market has quickly regained momentum in 2024 rising a staggering 37% as compared to 2023.
Outlook to 2030
In our view, the recent introduction of the Euro and Croatia's strong economic performance have played a major role here, and we are optimistic that this new momentum will continue in the short to medium term for several reasons.
Firstly, the expected partial convergence of Croatia's AUM/GDP ratio (assets under management/Gross domestic product) towards the European average will be a key driver. This is supported by the accelerating pace of financialization andgrowing investor awarenessin Croatia.
Second, the country's strong economic outlook plays a crucial role. We expect nominal GDP to grow by around 4.5% per year until 2030, which should have a positive impact on asset growth given the existing correlation between the two factors. However, while we see a growth story unfolding, full convergence with the European average is unlikely in the near term.
Looking ahead to 2030, we estimate an annual growth rate of 13.5% for Croatia's asset management sector, driven by 3.8% from asset appreciation and 9.7% from net inflows. While full alignment with the European average may take longer, the outlook is promising, and Croatia's asset management industry is poised to become an increasingly important part of the country's financial system as it integrates with the wider Euro area. We also see the potential for Croatia to outperform our forecasts if consumer spending continues to boost the economy at rates higher than expected. Moreover, we see a potential that investments might be shifted away from the domestic real estate market into financial assets.
As of October 2024
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