The two Croatians play together at Camp Nou, but Halilovic was on loan at Sporting Gijon last season. The 19-year-old scored three goals with five assists as he helped the club avoid relegation from La Liga.
However he was excluded from Ante Cacic's 23-man squad to travel to France, and Rakitic shared his surprise at his omission.
Rakitic told Marca that it was the "coach's decision" and that he has to "respect it."
He continued saying that he was "really surprised" about Halilovic's omission as he had "worked hard" with the "national team" and had a "phenomenal campaign."
Bright future ahead
The Croatians have been training at their base in Deauville ahead of their first game against Turkey on Sunday.
Halilovic has already made eight senior caps for the national team, and Rakitic believes that he has a bright future ahead of him.
Rakitic said that he needs to put this omission "behind him" and "focus on next season."
He continued saying that it "might do him good" to "start the campaign fresh" and believes Halilovic will "give a lot of joy to Croatian football."
History repeating itself
Croatia looked to be one of the favourites to get out of the group stages, general secretary of the Croatia Football Federation Damir Vbranvoci believes they can emulate the success of their third place finish in the 1998 World Cup, also in France.
He told uefa.com that their achievements from 98 are "written in golden letters in the history of Croatian football" and believes if they "show the same faith" the "same belief" and the "same strength" he believes the could "do it again."
Croatia will take on Turkey at the Parc des Princes, Paris on Sunday, June 12 with kick-off at 2pm BST.