In Bosnia and Herzegovina we focus on:
Restructuring and expansion of the local private sector: Bosnia and Herzegovina has a strong industrial heritage, an abundant supply of energy, and significant resources to support processing industries. The EBRD will target local and foreign companies for investments in the country and provide financing for restructuring and expansion of smaller local companies. We will provide SME credit lines through local banks, microfinance loans and non-financial support.
Forging closer linkages with wider regional markets: A small open economy such as Bosnia and Herzegovina's can reach its full economic potential only by integrating closely with wider regional markets. Regional integration, both physical and commercial, will become even more important in the new strategy period as Bosnia and Herzegovina now has a border with the EU as of 1 July 2013, following Croatia’s accession to the EU. The EBRD will support private investments, increased trade flows and infrastructure improvements deepening regional integration. We will encourage greater private sector involvement in public infrastructure upgrades and put a strong emphasis on improvements of standards towards EU norms.
Bosnia and Herzegovina 's policy response to the coronavirus crisis
The EBRD is monitoring Bosnia and Herzegovina 's policy response to the coronavirus pandemic. Our biweekly publication identifies the major channels of disruption as well as selected impact and response indicators.
EBRD forecast for Bosnia and Herzegovina’s real GDP Growth in 2022 3.0%
EBRD forecast for Bosnia and Herzegovina's real GDP growth in 2023 3.0%
The economic recovery in 2021 was much stronger than anticipated, with GDP surging well past the pre-pandemic level. The economy grew in 2021 by 7.1 per cent according to initial estimates, outperforming most forecasts. Economic activity in 2021 was driven by very strong external demand and domestic consumption. Exports rose by more than 40 per cent in real terms compared with 2020 on the back of higher demand from EU countries, while household consumption grew by 6 per cent in real terms, driven by post-Covid pent-up spending and supported by remittances (up by 20 per cent versus 2020, and above 2019 levels).
Investment growth was mildly positive on the back of the strong contraction in 2020, but did not reach pre-pandemic levels. Rising prices, as elsewhere, are a concern, with inflation reaching 10.2 per cent year-on-year in March 2022 as a result of higher food and energy prices. The impact of the war on Ukraine is expected to be reflected in further rising prices, which will adversely affect disposable incomes, an economic slowdown in Eurozone export markets (especially relevant for the large export-oriented manufacturing sector), as well as rising uncertainties more generally, including in domestic politics.
However, the continued strong impetus of export growth in the first two months of 2022 is expected to partially offset the anticipated slowdown later in the year. GDP growth is expected to slow down to 3.0 per cent in 2022, and remaining at the same rate in 2023. The continued lack of real reform progress and ongoing political instability continue to prevent the economy from moving to a higher potential growth path.