As per the 60 per cent votes counted, HDZ had 61 seats, while opposition SDP had 54; centre-right party Most came third with 13 seats
According to the preliminary results of Croatia's elections on Sunday, the country looked set for a lengthy coalition horse-trading after voters declined to bring in a clear majority.
Less than a year ago, within five months in power, the Croatian Democratic Union (HDZ)-led coalition government had broken down owing to a conflict of interest scandal. This is the second ballot which may lead to another coalition.
Early today, the 60 per cent votes counted pointed to HDZ winning over 61 seats while opposition Social Democrats (SDP) having 54. The centre-right party Most (the Bridge) stood third with 13 seats.
Securing a majority in the 151-seat parliament may be difficult for HDZ.
A low voter turnout indicated that the Croatians had lost interest in the voting process following a year of political deadlock which blocked reforms.
The economy needs to emerge from a six-year recession, with an unemployment rate of 13 per cent, public debt up to 85 per cent of GDP and deficient investment climate.
The previous coalition made a significant shift to the right, attacking the Serbs and putting restrictions on the media which further strained its ties with Serbia.
However, the HDZ is now banking on Andrej Plenkovic, a more moderate leader who could gain support from the Serbs, AFP noted.
Former member of the European parliament Plenkovic vowed to move from extremism and populism to the center-right.
"I'm certain that we are the party that will have the privilege to form the next stable Croatian government," Plenkovic said today.
Former prime minister Zoran Milanovic and Plenkovic's rival, however, said, "It is too early to call the result."
He also emphasised the need for a stable government, calling the previous government an "unstable and destructive one."
(WION with inputs from agencies)