Research Detail
| Bosnia and Herzegovina | Growth set to slow moderately |
Growth set to slow moderately Economic activity exceeded expectations last year, underpinned by buoyant investment activity and higher private consumption, with average growth rate at 4% y/y. High-frequency indicators indicate slowdown in 2023, albeit rather soft one, reflecting still high inflation weighing on consumption and weaker external demand. Inflation ripped through the economy, rising 14% y/y on average in 2022, with the October peak reaching 17.4% y/y. The sharp rise was due to soaring food and transport prices, which grew 22% y/y and 26% y/y, respectively. Inflation pressures started to dissipate in 2023, with April’s figure falling to 7.9% y/y. The energy crisis, among other things, aggravated external imbalances, pushing the C/A gap to 4.5% of GDP, up from 2.3% in the previous period. The deterioration is due to investment-driven import volumes in combination with a high energy bill. Despite some pre-election spending and social energy support measures, overall fiscal health remains stable. EU candidacy status received in December 2022 could serve as catalyst for structural reforms, especially given subsiding political risks, also confirmed by S&P’s outlook upgrade to positive in February. |
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| 2023/06/06 / Erste Group Research |
Growth set to slow moderately Economic activity exceeded expectations last year, underpinned by buoyant investment activity and higher private consumption, with average growth rate at 4% y/y. High-frequency indicators indicate slowdown in 2023, albeit rather soft one, reflecting still high inflation weighing on consumption and weaker external demand. Inflation ripped through the economy, rising 14% y/y on average in 2022, with the October peak reaching 17.4% y/y. The sharp rise was due to soaring food and transport prices, which grew 22% y/y and 26% y/y, respectively. Inflation pressures started to dissipate in 2023, with April’s figure falling to 7.9% y/y. The energy crisis, among other things, aggravated external imbalances, pushing the C/A gap to 4.5% of GDP, up from 2.3% in the previous period. The deterioration is due to investment-driven import volumes in combination with a high energy bill. Despite some pre-election spending and social energy support measures, overall fiscal health remains stable. EU candidacy status received in December 2022 could serve as catalyst for structural reforms, especially given subsiding political risks, also confirmed by S&P’s outlook upgrade to positive in February. |
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