Economic activity in Bosnia and Herzegovina during the first halfWhat is 2025. shows mixed signals, with slow growth in the first and mild recovery in the second quarter.
Specifically, the first quarter of 2025. He brought a slower growth of GDP (1.7% per year) compared to a five-year average of 2.7%. Although all GDP components recorded growth, key drivers, in the form of private consumption and investment, have shown significantly weaker dynamics. Private consumption increased by 1.7% compared to the same period last year, while investment activity slowed 5.5%, which is multiple growth rate compared to the same quarter of the previous year, when investments recorded a growth of significant 18.5%. In addition, government spending recorded a growth of 1.6%, which is among the lowest post-covid rates.
“Slow down in the first quarter of 2025 is primarily visible through the export of foreign trade. A marginal annual growth of 0.4%, which resulted in the increase in the total GDP, together with the decline in key industrial sectors, where The manufacturing industry records an annual decrease of 5.3%, a subsequent decline in the annual basis. Finally, the construction sector has also shown a weakness of 0.8%, due to the delay of public infrastructure projects and reduce private investments.
On the other hand, the service sectors showed resistance and growth: tourism increased by 11.8%, administrative services for 10.6%, professional and technical activities by 6.5%, while the transport and storage segment increased by 5.3% per year. These sectors not only depreciated in traditional industries, but indicate a gradual transition to the knowledge-based and service economy, “Sector Analysts Research, Strategy and ESG Raiffeisen Bank Management emphasized.
After the below average first quarter, indicators from the second quarter of 2025. years point to a slight economic acceleration. This is visible in such a way that exports of goods increased by 4.7% per annum, exceeding the import growth of 3.5%, although the trade deficit increased by 2.7%. Additionally, industrial production increased by 2.6% per year in June, resulting in total growth of 0.6% in the second quarter of 2025. Years. It is especially important that the manufacturing industry records growth in two consecutive months and thus indicates a possible reversal in negative trends from the first part of the year. The retail index showed the signs of recovery in May (1.1%) and June (4.6%), after four months of decrease, which was the cumulative index for the first half of the year -0.6% compared to the previous year.
Nevertheless, the negative side of economic activity in the second quarter of 2025. is the fact that inflation returns to focus again. After slowing down in 2024. year, when BiH has recording the lowest inflation rates, the inflationary impact was happening early in 2025. years when the inflation rate reached 4.6% on an annual basis, while the average inflation in the first half was 3.6%. Inflationary pressures are further reinforced with a significant increase in the minimum salary in the FBiH and the RS, which influenced the expectations and operating costs. The largest price growth was recorded in food categories (8.5%), health services (6.5%), restaurants and hotels (6.3%), and recreation and culture (3.8%). On the other hand, the prices of clothing and footwear fell by 8.5%, while transport costs decreased by 3.4%, influenced by global oil prices and petroleum products. Due to stronger inflationary pressures than expected, inflation projections for 2025 were revised from 3.5% to 3.9%, with the expected SM
Given the economic trends in the first two quarters in 2025. year, the GDP growth forecast for 2025 is a moderate growth of 2.5% per year, while the medium-term growth dynamics are estimated at the average 3.2% per year. Recovery is expected through stabilization of consumption, managed salaries and lending, then continuing investment in the energy sector and digitization, and growth exports, especially in the tourism.
Bosnia and Herzegovina still faces challenges on the road to further EU integration. Although the country received the status of candidates in 2022. year and the Green Light for the beginning of March 2024. Year, the release of the Reform Agenda has led to BiH not in the group of countries that received pre-financing from the western Balkans’ plan. BiH adopted only the Draft Reform Agenda in June 2025. years, and due to the inconsistencing of this document, BiH lost 10% of the growing plan available. Total funds available by 2027. amount to EUR 976.6 million for BiH, but further delays can lead to additional cuts. The European Commission has clearly placed that the real reforms are the key to EU funds. By the end of September 2025. BiH should adopt the final version of the Reform Agenda, appoint the General Negotiators for EU Accession Negotiations and adopt two key laws within the scope of the work of the judiciary in BiH. Otherwise, I would risk the extra loss of funds and why
“In the coming months, Bosnia and Herzegovina has the opportunity to return to the Reform, open the financial incentives for accelerating economic development, and institutional stability is crucial”, the Raiffeisen Bank analysts in Bosnia and Herzegovina.
