Bosnia and Herzegovina flag Bosnia and Herzegovina: Economic outline

Economic Outline

Economic Indicators

Nowadays, Bosnia and Herzegovina is considered an upper-middle-income country, achieving great results since 1995, the year in which the inter-ethnic conflict that destroyed much of the Bosnian economy and infrastructure, increased unemployment and decreased production, came to an end. Following a robust post-COVID-19 recovery, economic activity decelerated in the first half of 2023 due to weakening external demand and subdued private consumption amid persistently high, albeit decelerating inflation. The IMF estimated GDP growth for the entire year of 2023 at 2%. In 2024 and 2025, anticipated stronger private consumption, bolstered by lower inflation, along with strengthening external demand, are expected to facilitate a moderate acceleration in growth, reaching around 3%.

In the last few years, the general government accounts stayed nearly balanced, driven by stronger-than-expected revenue growth. However, planned investment spending faced challenges in implementation, primarily due to administrative obstacles and/or political deadlocks. This pattern is expected to persist in 2024 and 2025, although the upcoming general elections in 2024 are anticipated to introduce spending pressures, potentially resulting in a higher deficit. The IMF forecasted the budget deficit at 1.3% of GDP last year, 1.5% in 2024, and 1.1% in 2025. The debt-to-GDP ratio is relatively low (at 28.6% in 2023) and is expected to remain stable over the forecast horizon (IMF). Despite decelerating compared to the previous year, inflation remained high at 5.5% in 2023, primarily driven by rising prices for food, non-alcoholic beverages, housing, electricity, and household equipment. Throughout the forecast period, headline inflation is expected to continue declining, mainly due to the slowdown in price increases for imported commodities, particularly energy.

During the first eight months of 2023, employment was 1.3% higher than a year before, although unemployment remained high (15.3%, IMF). The primary sectors generating employment were trade and tourism. An outflow of skilled labor was also noticed, leading to labor shortages in sectors like construction. This trend might exacerbate wage pressures beyond productivity growth, potentially affecting the country's competitiveness. Short-term projections indicate continued growth in employment and further declines in unemployment, although a substantial portion of structural unemployment may constrain the extent of this decrease. The country’s GDP per capita (PPP) is low, estimated at USD 20,377 in 2022 by the World Bank.

 
Main Indicators 20222023 (E)2024 (E)2025 (E)2026 (E)
GDP (billions USD) 24.5427.2229.0830.7532.44
GDP (Constant Prices, Annual % Change) 4.21.82.53.03.0
GDP per Capita (USD) 7,0647,8578,4168,9279,440
General Government Balance (in % of GDP) 0.2-0.9-2.5-2.5-2.2
General Government Gross Debt (in % of GDP) 29.628.129.730.231.1
Inflation Rate (%) 14.06.13.02.72.5
Unemployment Rate (% of the Labour Force) 15.413.313.313.313.3
Current Account (billions USD) -1.07-1.18-1.30-1.32-1.33
Current Account (in % of GDP) -4.3-4.3-4.5-4.3-4.1

Source: IMF – World Economic Outlook Database, 2016

Note: (e) Estimated Data

 
Monetary Indicators 20162017201820192020
Bosnian Mark (BAM) - Average Annual Exchange Rate For 1 GBP 2.392.232.212.132.20

Source: World Bank, 2015

 

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Latest Update: April 2024

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