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Economic growth

Revised Economic Growth Projections for Bosnia and Herzegovina Amid Weakening Demand

Strategic Insights

— 1 min read

Bosnia and Herzegovina's economic growth is expected to slow down to two percent this year, as domestic and external demand continue to weaken. The Central Bank of BiH (CBBiH) has revised its medium-term macroeconomic projections, citing the impact on personal consumption, investments, imports, and exports. Despite the slowdown, personal consumption is still expected to drive economic growth, and the CBBiH anticipates a gradual easing of inflationary pressures over the projection horizon. However, the lack of official GDP expenditure-based data for the second quarter has introduced uncertainty, and the bank has warned that projections may be revised in the future.

Key Takeaways:

  • The Central Bank of BiH has revised its economic growth projection for Bosnia and Herzegovina to two percent this year, due to weakening domestic and external demand.
  • Personal consumption is still expected to be the largest contributor to economic growth, despite the slowdown.
  • The bank has emphasized a gradual easing of inflationary pressures over the projection horizon.
  • Domestic inflationary pressures have increased significantly since the beginning of the year, with a projected inflation rate of 4.1 percent in 2025.
  • The estimated values of real GDP, its components, and other macroeconomic variables are subject to a high degree of uncertainty related to economic activity in major trading partner countries, political conditions, and changes in the domestic labor market.
  • CBBiH has noted that the latest rapid estimate of real GDP growth for Q2 was 1.9 percent, but a detailed revision of official GDP data is currently underway.
  • The bank has warned that projections may be revised based on the outcome of this revision.

Statistics:

  • Economic growth projection for Bosnia and Herzegovina: 2%
  • Personal consumption contribution to economic growth: largest macroeconomic aggregate
  • Inflation rate prediction for 2025: 4.1 percent
  • Inflation rate revision: 0.6 percentage points upward from the spring round
  • Real GDP growth rate for Q2: 1.9 percent (rapid estimate)
  • Degree of uncertainty related to macroeconomic variables: very high

Sources:

  • Central Bank of BiH (CBBiH)
  • Autumn round of medium-term macroeconomic projections

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