CROATIAN ECONOMIC EXIT STRATEGY DURING COVID-19 PANDEMIC AND IMPORTANCE OF REGIONAL ECONOMIC STRUCTURE

The aim of the paper is to identify the sectors with the highest potential to mitigate the negative economic consequences of the spread of COVID-19 virus in Croatia based on the multiplicative effects and intensity of regional integration. Croatia has been divided in two regions, Continental Croatia and Adriatic Croatia. Cross-industry location quotient (CILQ) methodology was used to compile the regional input-output tables. The method is based on the specialization of individual regions in the production of specific groups of products, based on which national technical coefficients are adjusted at the level of individual regions. The contribution of the research is based on the lack of empirical literature that would deal with regional input-output analysis for the Croatian economy. Results of this paper can be used as a basis for defining economic exit strategy aimed at faster recovery from the recession. The highest multiplicative effects and the highest intensity of regional integration have been observed in manufacturing, agriculture and construction sectors. This group of activities can, with some precautions, take place so far without the high risk of spreading the virus. Stimulation of these activities results in positive effects even in the short term. Due to the high multiplicative effects, a positive impulse will spread to other activities and regions. In addition to these activities, emphasis should also be placed on improving health system and information and communication technology sector, where indirect economic effects are slightly lower but will be crucial for the smooth running of economic activity in the future. Tourism sector has shallow multiplier, but above average share of final uses. It has significant impact on government budget revenues.