Croatian PM Announces 'New Economic Development Model'

"Croatia has entered the time of a new development model that relies on competitiveness and productivity, and not on massive public investment in infrastructure," Milanovic told the Invest HR conference in Zagreb on Monday.

"We have a new development model; we do not need hundreds of kilometres of new highways and thousands of new houses, but we need investment in quality," he added.

He insisted that after six years of recession, Croatia's economy was on the rebound as a result of his government's three-and-a-half years in office.

"After three-and-a-half years, Croatia is obviously emerging from recession. Not only is the value of industrial production growing, but also its competitiveness and productivity," he stressed.

Milanovic also insisted that the shipyard industry, which has been troubled for the last 20 years, was recovering.

"Shipbuilding has been salvaged; it has entered a new development cycle. We are producing expensive, high-quality and competitive ships," he said.

Milanovic also said that Croatia had to project an open and modern image to improve its economic attractiveness.

"We must be open, not rigid and narrow-minded, especially in tourism," he said.

He suggested that the weekend referendum backing same-sex marriage in Ireland - another relatively small, traditionally Catholic EU member - would result in economic benefits.

"In the campaign 'for' [gay marriage], in addition to the rock stars, the loudest [supporters] were the biggest entrepreneurs, who saw a business opportunity, because now Ireland will be looked on in a different light," he said.

It was also announced at the conference that Croatia's exports grew 14 per cent in the first three months of 2015.