Economic studies
Bosnia and Herzegovina

Bosnia and Herzegovina

Population 3.5 million
GDP per capita 6,712 US$
Country risk assessment
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major macro economic indicators

  2020 2021 2022 2023 (e) 2024 (f)
GDP growth (%) -3.0 7.4 3.9 2.0 2.5
Inflation (yearly average, %) -1.1 2.0 14.0 5.5 3.0
Budget balance (% GDP) -5.2 -0.3 -0.4 -1.0 -1.5
Current account balance (% GDP) -3.2 -2.4 -4.5 -4.5 -4.0
Public debt (% GDP) 36.0 34.6 29.7 28.5 28.0

(e): Estimate (f): Forecast


  • Significant remittances from expatriate workers
  • Currency pegged to the euro
  • EU Membership talks since 2024
  • Tourism (12% of employment and 10.5% of GDP in 2019) and hydroelectric potential (34.5% of electricity produced)
  • Member of various trade agreements, including CEFTA, a regional common market of 6 Balkan countries
  • Wage competitiveness


  • Institutional, regulatory, economic, and community fragmentation, secessionist aspirations
  • Lack of public investments
  • Low diversification of exports
  • Corruption, defective rule of law
  • High emigration, lack of skilled labour
  • Large informal sector (estimated at 1/3 of GDP), low labour force participation (50%), high youth unemployment (1/3)
  • Dependency on external financial aid

Risk assessment

Moderate growth

In 2024, growth will remain moderate, being negatively impacted by the sluggishness of private consumption (65% of GDP). It will continue to suffer from the erosion of real wages and the high cost of borrowing, despite the easing of inflationary pressures due to the slowdown in fuel and food prices. Moreover, the economic underperformance of European countries may weigh on remittance inflows from expatriate workers, primarily from Croatia, Serbia, Germany, and Austria, thus further restricting household purchasing power. Nevertheless, growth will be supported by public investment, particularly through large-scale infrastructure projects. The completion of four new sections of the Vc corridor highway, scheduled for 2024, will bring the total construction distance to 63 out of the 212 kilometers financed by loans from the European Bank for Reconstruction and Development, the European Investment Bank and European grants. The 335km project, connecting the north to the south of the country, aims to improve Bosnia's connectivity with its neighbors, notably Croatia, and is expected to boost prospects for the tourism sector, which should also support growth in 2024.

Twin deficits to persist in 2024

The current account deficit will decrease very modestly in 2024, with export growth surpassing that of imports. The surplus in services, although insufficient to offset the large deficit in the trade balance, will contribute to this improvement thanks to the strong performance of the tourism sector. However, these performances will remain subject to the economic situation in Europe, which is the main origin of tourists. Moreover, remittances from expatriate workers will continue to support the positive balance of secondary income, although their flow could also decrease with the moderation of European growth. On the other hand, the debt burden will continue to weigh on the primary deficit.
Furthermore, the budget deficit will slightly widen in 2024 due to the moderate increase in investment spending, while revenues will remain roughly at the same level. The local elections in October 2024 are also expected to exert upward pressure on expenditures, such as the remuneration of public sector employees. Moreover, the sustainability of public debt will continue to be ensured, as its already low level continues to trace a downward trajectory.


Negotiations for EU accession compromised by heightened ethnic fragmentation

In 2024, institutional complexity and ethnic divisions will slow Bosnia's accession negotiations with the European Union. Following the Dayton Accords in 1995, Bosnia and Herzegovina were divided into two autonomous entities: the Federation of Bosnia and Herzegovina (FBiH) with a Bosniak and Croat majority, and Republika Srpska, with a Serbian majority, along with the Brčko District, managed by the central state. The Brčko District has limited powers, with the majority concentrated in the two autonomous entities, and is governed by a three-member rotating presidency representing the three ethnic groups, operating on a consensus basis. Following the general elections in October 2022, the Council of Ministers, acting as the central government, was elected in late January 2023, with the support of 23 parliamentarians from the House of Representatives out of 42, representing eight parties. It is dominated by two main parties, namely the Serbian ethno-nationalists (SNSD) and the Croatian ethno-nationalists (HDZ BiH). Since then, measures have been taken to comply with the EU's 14 requirements following the grant of candidate status, such as electoral reforms and strategies for combating organised crime, money laundering, or managing migration. Currently, only candidates belonging to one of the three ethnic groups can run for elections. These reforms will be supported by the EU's EUR 6 billion growth plan proposed to candidate Balkan countries. The funds are expected to be distributed between grants, amounting to EUR 2 billion, and loans, amounting to EUR 4 billion, disbursed both upstream to help countries accelerate their reforms and downstream upon completion of annual targets. However, the separatist project of Republika Srpska President Milorad Dodik who was re-elected in October 2022 after controversial elections, having previously held the position from 2010 to 2018, will continue to fuel tensions between the two autonomous entities and delay EU accession negotiations. Disagreements have intensified with his indictment in August 2023 by state prosecutors for signing laws that suspended decisions of the Constitutional Court and the UN High Representative for Bosnia. The trial, already postponed twice, is expected to take place in early 2024 and further crystallise tensions. Milorad Dodik's close ties to Russia will also continue to reinforce divisions. Furthermore, the central state will cultivate its relations with Croatia, with whom it maintains strong economic ties in terms of traded goods and investments. The construction of a gas pipeline between the two countries is planned for 2024. However, it may be delayed if the Croatian Democratic Union of Bosnia and Herzegovina (HDZ BiH) insists that the Bosnian operator of the gas pipeline be based in Mostar, a region with a Croat majority, and not the BH-Gas company established in Sarajevo, which was initially chosen for the project.


Last updated: March 2024