Bosnia and Herzegovina's Economy Set for 2.6% Growth in 2024 Amid 2% Inflation

Bosnia and Herzegovina's economy is projected to grow by 2.6% in 2024, with an inflation rate standing at 2% as of May 2024. This forecast comes from Raiffeisen Bank BiH, which has revised its earlier projection of 3% growth following weaker performance in the last quarter of 2023 and stagnant external demand.

The primary drivers of economic growth in Bosnia and Herzegovina for 2024 are resilient private consumption and stable investment growth. These factors are expected to help the economy overcome the challenges posed by external market conditions.

Raiffeisen Bank BiH analysts predict an average inflation rate of 2.7% for 2024, considering anticipated pressures on oil and electricity prices. This marks a significant decrease from the average annual inflation rate of 6.1% in 2023, indicating a stabilizing economic environment.

Why this matters: Bosnia and Herzegovina's inflation rate has a significant impact on the country's economic stability and growth. A stable inflation rate can lead to increased investor confidence, job creation, and improved living standards, while high inflation can erode purchasing power and exacerbate poverty.

Bosnia and Herzegovina's gross domestic product (GDP) grew by a real 1.6% year-on-year in 2023, following an annual increase of 3.8% in 2022, according to preliminary data from the country's statistical office. This slowdown in growth highlights the challenges faced by the economy amid fluctuating external demand and other global economic factors.

Raiffeisen Bank BiH noted that the beginning of 2024 did not bring the expected revival in external demand or a stronger recovery in commodity exports and industrial production. The statement read, "In addition, the beginning of 2024 did not bring the long-awaited signs of a revival in external demand, accompanied by a stronger recovery in commodity exports and industrial production."

Bosnia and Herzegovina's economy is expected to grow by 2.6% in 2024, driven by private consumption and investment growth. The inflation rate is expected to remain manageable at 2.7%, a significant improvement from the previous year's figures. However, the lack of revival in external demand remains a concern for the country's economic outlook.

Key Takeaways

• Bosnia and Herzegovina's economy to grow 2.6% in 2024.
• Inflation rate expected to be 2.7% in 2024, down from 6.1% in 2023.
• Private consumption and investment growth to drive economic growth.
• Lack of revival in external demand remains a concern.
• GDP grew 1.6% in 2023, down from 3.8% in 2022.