THE EFFECT OF STATE INTERVENTIONS ON THE TOURISM SECTOR OF THE REPUBLIC OF CROATIA

ABSTRACT

As part of the tertiary sector, the tourism market represents a constantly growing global industry. Revenues from tourism represent a substantial tax inflow for the Republic of Croatia, considering that the share of the entirecountry's GDP generatedfrom tourism activities ranges between 17 and 20% annually. The new pandemic caused by the coronavirus represents the biggest contemporary shock for world economies and economic trends. The tourism sector is the most affected by this pandemic because it is based on the movement of people, consumers' sentiments and the need for security and human contact in most activities. Compared with previous (either financial or public health) crises, the pandemic-caused crisis had the most significant impact on the economy due to globalisation and the openness of the global economy. Business entities that are part of the tertiary sector, especially those within the tourism industry, experienced a sudden drop in business volume due to the global pandemic caused by the spread of the coronavirus. The decline in business activities leads to a decrease in income and, thus, to lower state yields, which causes state intervention and borrowing. The paper analyses and compares the Croatian tourism sector with the competing Mediterranean countries of the EU and shows the influence of state interventions on tourism activities, which conditions state intervention and borrowing. The paper analyses and compares the Croatian tourism sector with the competing Mediterranean countries of the EU and shows the influence of state interventions on tourism activities.