The main highlights of the report on the situation in Croatia in the past year refer to the successful completion of the country's EU membership negotiations, the expected signing of an accession treaty by the end of the year, to be followed by its ratification in the member-countries' parliaments, and Croatia's accession to the EU, expected in July 2013.

Also highlighted is the gradual implementation of the government's Economic Recovery Programme (ERP), adopted last year. Some reforms have been made to the pension system and to tackle long-term unemployment, but other measures envisaged by the programme to increase the long-term competitiveness of the Croatian economy have yet to be adopted, reads the report.

According to the EBRD, Croatia's macroeconomic performance remains weak. The economy recorded negative growth in 2010 and only marginally positive growth is expected this year. While inflation is low, the level of foreign exchange reserves is relatively low compared to regional peers and the banking system remains heavily dependent on external financing, says the EBRD.

The bank expects Croatia's economy to recover very slowly, forecasting that GDP will grow only 0.5 percent this year. In 2012 and 2013, the growth of GDP is likely to be supported by EU pre-accession funds, it says.

"However, significant vulnerabilities persist, in particular if the government fails to fully implement the ERP and if the recovery of the eurozone continues to remain sluggish. The economy is facing serious competitiveness problems unless deep structural reforms are implemented."

As for the main challenges in 2012, the EBRD cites the need to restore robust growth, the need to step up privatisation, and advancing further commercialisation of infrastructure.

The 2011 Transition Report, entitled "Crisis and Transition: The People's Perspective" analyses a large body of data collected by polling 39,000 people, mostly from the new Member States of the European Union.

The report reveals that people became less supportive of democracy if the recent crisis hit them hard relative to their memories of past crises. The findings of the report suggest that markets and democracy lost support in the more advanced transition countries because they experienced deeper downturns in this crisis than in earlier recessions in the early and mid 1990s.

A separate chapter of the report shows that the crisis affected ordinary households in the transition region far more than in Western countries.

The report also notes that while mortgages supported consumption during the crisis in the West, they had the opposite effect in the transition region, with this trend linked primarily to the take-up of foreign exchange-denominated mortgages in countries that experienced significant currency depreciation.

The chapter detailing the factors that support entrepreneurship finds that women are less likely to attempt to set up a business but no less likely to succeed than men once they try. It concludes that this may argue for policies targeted at encouraging potential female entrepreneurs.