Executive summary: Highlights.

The article presents an update and forecast on economic and political conditions in Croatia for the period of 2009 to 2010. The challenges faced by the centre-right government led by the Croatian Democratic Union (HDZ) include combating corruption and organised crime. The trade deficit of Croatia is estimated at around 26% of gross domestic product (GDP) in 2008. The government has finalized negotiations with the European Commission regarding the privatisation of six state-owned shipyards.