The economy of Bosnia and Herzegovina entered in 2025. year with visible signs of deceleration, according to the latest European Commission’s report on the economic state of the countries in the expansion process. According to the document, the industrial production continued down, and retail turnover also declined, which indicates the weakening of economic activity in the country.
The Central Bank of BiH has revised the forecast for economic growth for this year – from previous estimates to 2.4 percent. The main reason is the expected weakening of external demand, while an increase in inflation is expected at 3.5 percent, mainly due to domestic pressures on prices caused by strong salary growth.
The European Commission provides a subtle, but a clear signal – the growth of salaries, especially in the public sector, comes at the time the economy weakens, which also criticized the domestic economic experts as a populist measure that does not accompany realistic indicators.
In the fourth quarter of 2024. Real GDP grew by 2.5 percent on an annual basis, which is barely noticeable slowdown compared to the previous quarter. However, the industrial sector – which makes the fifth total added value – records the tenth consecutive quarter of the fall, which is a serious indicator of structural problems.
Nevertheless, BiH authorities submitted to the European Commission for the European Commission for the period 2025-2027, which will increase domestic demand, and that the budget deficit of 1.3 percent has reversed to surplus up to 2027. years. Also, a further decline in public debt is expected.
Domestic consumption remains a key rural support. In the fourth quarter of gross investment, they increased by 7.3 percent, and private consumption by 1.9 percent. Exports grew slightly, while imports grew stronger, under the influence of internal demand.
Positive shifts are also seen in the labor market. The number of employees in the last quarter last year was 0.6 percent higher than the year earlier, while the number of unemployed decreased by almost 23,000 people. Unemployment is in 2024. reduced to 11.7 percent, which is the lowest level in recent years.
However, salary growth – especially in the public sector – a potential risk remains. Nominal salaries in the fourth quarter of 2024 were increased by 9.8 percent, while in the first two months of 2025. even more powerful jumps were recorded – from as much as 13.9 and 13 per cent per year.
The European Commission warns that such dynamics could further enhance inflationary pressures and jeopardize the competitiveness of the economy, especially in the export sectors. The moment the industry weakens, and the external factors are not in favor, domestic fiscal and payment policies must be more thoughtful, the report is sent, writes Noise.
