This year, Bosnia and Herzegovina is once again following the familiar scenario – export growth that cannot keep pace with import growth, so it will almost certainly end up in deficit in 2025.
Although economists say that this is “normal” for small, transitional economies like Bosnia and Herzegovina. markets, behind that phrase hides a whole series of missed opportunities, bad policies and unused potentials – from energy to nutrition.
While we export raw materials and import finished products, the state still does not offer any serious strategy to stimulate domestic production, open new markets or at least prevent its own decisions from further weakening the economy.
And as things stand, this year will also end in a deficit, economists say that this is to be expected.
In the period from January to September this year, the foreign trade deficit amounted to 9.634 billion KM, according to data from the Agency for Statistics of Bosnia and Herzegovina.
According to these data, exports amounted to 12.6 billion KM, which is six percent more than in the same period in 2024.
– Imports amounted to 22.235 billion KM, which is 4.3 percent more than in the same period of the previous year – the data states.
Small economies
Admir Čavalić, an economic expert, explains to Faktor that the data of the BiH Statistics Agency show that BiH. the market has exceptional convergence with the markets of the EU and CEFTA countries.
– This indicates that we will end the year with a deficit, and this is something that repeats itself year after year and is expected in small, transitional economies like Bosnia and Herzegovina.
What the data shows is that our market has exceptional trade corvergence with the markets of the EU member states and of course the CEFTA market.
We see that there has been a certain growth in exports and growth in imports, but a slightly more significant growth in our export activities, close to six percent, or four percent when we talk about imports, we will see if it will remain so in percentage amounts until the end of the year, but this definitely shows that we will probably end this year with a deficit – said Čavalic.
He points out that the reasons can be numerous, mostly explained at the end of the year.
When asked where the problem is and how to encourage domestic production, Čavalic says that these are economic reforms, fiscal relief, liberalization and encouraging competition in order to strengthen the offer.
The unused potential of domestic production
Igor Gavran, an economic analyst, told Faktor that there are two parallel problems – exports far below our capabilities and the real potential of domestic production.
– Part of the reason lies in our non-competitiveness, but it is not the only issue – we are dependent on the EU and regional markets and export very little outside that limited framework, although no one prevents us from at least trying to enter new markets. Let’s say in the market of the Russian Federation, the competition is less than before due to the sanctions of many countries, but we do not use that, and the import is far above our needs, where an enormous part refers to those products that we either produce ourselves in sufficient quantities or we can easily produce them ourselves – explains Gavran.
He adds that the problem is also the structure where we mainly export raw materials, raw materials and cheaper finished products and import more expensive ones.
– And recently there has been a particularly tragic case of electricity, which we export less and less and import more and more. Oil and oil derivatives are another tragedy, but a long-term one, because we even have certain reserves of crude oil (which we do not explore and exploit), we have an oil refinery that could produce derivatives for the entire BiH market and export, but we do not use any of it. Now that Serbia is facing sanctions, they could export there as well, but instead we have a refinery that is not working without any technical or economic justification – he points out.
Destructive measures
He believes that at least the authorities should not harm the economy and make it less competitive, and as an example he cites the destructive measures of increasing the minimum net wage without reducing contributions or by increasing the price of electricity and other public services and yet without any parallel relief and incentives – concluded Gavran.
We see how even public companies for which the authorities are directly responsible and which seem to be doing well as a dedicated industry are in fact at constant risk of ceasing production and eventual collapse because they either do not have guaranteed raw materials or the workers are paid even below the level of the city’s collective agreement. Not to mention the electricity industry, which is in free fall in both entities, he writes Factor.
