By Igor Ilic

ZAGREB (Reuters) - Croatian lawmakers voted on Monday to dissolve parliament, paving the way for a snap election after bringing down the fragile five-month old government last week.

The election is likely to happen in early September as it must be held no earlier than 30 days and no later than 60 days after the date when parliament is dissolved, set for July 15.

President Kolinda Grabar-Kitarovic, who will chose the election date, said she would take account of the fact that most parties favored holding the vote after the summer holidays.

Analysts say a snap election may not solve the political impasse that has prevented Croatia getting a stable government capable of carrying out reforms needed to fix fragile public finances and improve the investment climate.

Neither the main conservative HDZ party - which called last week's no-confidence vote - nor the biggest opposition party, the Social Democrats, are likely to win an absolute majority.

"Another hung parliament is a distinct possibility ... potentially spelling prolonged political instability in Croatia," the IHS analysis company said.

"Croatia emerged from a six-year recession in 2015 and the latest political impasse will likely undermine the country's recovery."

One of the weakest European Union economies, Croatia is struggling to boost growth and reduce public debt.

Next year will be a tough one for Croatia financially as it has to repay almost 30 billion kuna ($4.52 billion)of maturing bonds and interest. For favorable borrowing conditions it needs to put forward a convincing reform plan.

(Editing by Robin Pomeroy)