The World Bank predicts that more real income will further encourage private spending in the coming years. However, an increase in inflation is expected, primarily due to the growth of food and service prices, which will affect global economic uncertainty
The economic growth of Bosnia and Herzegovina, promoted increased consumption and investment, improved in 2024. year, reaching 2.6 percent, published the World Bank in the report presented on Monday. According to their projections, growth in 2025. should amount to 2.7 percent, and in 2026. year 3.1 percent, but will require deeper reforms to increase productivity and attract new investments.
Real growth in Bosnia and Herzegovina in 2024. year amounted to 2.6 percent, after 1.9 percent in 2023, which is the result of two opposing factors. Domestic demand, due to higher consumption and investment, increased by 4.4 percent, while net exports decreased by 23 percent due to the deterioration of trade and growth-related trade conditions.
At the same time, inflation was in 2024. year slowed to 1.7 percent, while the year earlier was 6.1 percent. The prices of most goods and services have grown faster than food prices, so the basic inflation was 2.8 percent, and food price inflation is 2.1 percent. The slowdown in inflation has contributed to the decline of transport prices and to slow down the growth of housing prices, water supply, electricity and gas.
The World Bank predicts that more real income will further encourage private spending in the coming years. However, an increase in inflation is expected, primarily due to the growth of food and service prices, which will affect global economic uncertainty.
“Bosnia and Herzegovina is making modest economic growth, and the encouragement of this growth is required by export-based consumption models. At the same time, political stability will be crucial to the long-term support of the investor,” Christopher said Sheldon, the head of the World Bank Office for BiH and Montenegro.
Compared to the countries of the region, the World Bank is the highest growth rate provided for Kosovo (3.8 percent), then Serbia (3.5 percent) and Albania (3.2 percent). BiH follows with the intended growth of 2.7 percent, while the North Macedonia provides for a growth of 2.6 percent.
The report emphasizes that the diversification of the growth sources and the renewal of the program of structural reforms is the most effective strategy for the preservation of economic resistance in the times of uncertainty. Among the key measures, the removal of obstacles to the labor market, including obstacles that affect women, deepening regional economic integration, improving management standards and increasing market competition.
It also points out that faster implementation of reforms within the European Union process, including the Association of the Uniform Payment In Euro (SEPA), and the introduction of the cross-border operations, further improved investor trust and helped create new jobs.
The World Bank also warns of the influence of climate change and transition to the “green” economy, which changes sectoral employment forms. Therefore, the economies of the Western Balkans should reform social protection and employment services to make the working capacity to be ready for new challenges, including floods, drought and forest fires, and for new opportunities adopted by green transition.
Strengthening the protection of work income, more flexible social protection systems and the retraining of the labor force for “Green” workspots are stated as key measures that would contribute to greater resistance, poverty reduction and strengthening economic growth, writes Liberation.
