Erste Bank revises downward Bosnia's 2019 growth forecast to 2.6%

Erste Bank revises downward Bosnia's 2019 growth forecast to 2.6%
By bne IntelliNews August 13, 2019

Erste Bank has revised downward by one percentage point its forecast for GDP growth in Bosnia & Herzegovina this year to 2.6%, citing external trade influences and delays in public investments due to the lack of a government in office.

It is the most pessimistic independent projection so far, with Raiffeisen forecasting, in July, 2.7% a GDP advance, while also mentioning downside risks. 

Notwithstanding the expected moderate growth in 2019, medium-term growth projections are supported by the projected stable private demand and accelerated investment cycle after the formation of a government, Erste commented on a more positive note.

Inflation is still benign, with a small increase projected in the second half of the year due to a rise in gas prices in May, the bank said. Consumer prices in Bosnia increased 0.3% y/y in June, slowing from the 0.8% y/y rise in May.

The trade deficit is expected to worsen slightly, reflecting the high import dependence of the economy due to the consumption-related cycle.

The fiscal position remains stable, but the political impasse hampers the potential for public investment, Erste’s report reads. Bosnia is still unable to form a ruling coalition following last October’s general election and a new government is not likely to be established at state level soon.

Related Articles

Energy Community says Bosnia, Serbia, Ukraine unlikely to meet 2020 renewables targets

Bosnia & Herzegovina, Serbia and Ukraine are unlikely to meet their 2020 renewables targets, while the situation in Albania, Kosovo and North Macedonia remains questionable due to the impact of ... more

European court rules Bosnia must enable elections in Mostar after 11-year break

The European Court of Human Rights ruled on October 29 that Bosnia & Herzegovina must amend its legislation to allow local elections to be held in Mostar after an 11-year ... more

UN urges Bosnia to secure migrants’ safety, criticises violence by Croatian police

The United Nations has called on Bosnia & Herzegovina to stop forcing migrants to settle at the unsafe camp of Vucjak near the border with Croatia, which was claimed to be unfit for humans, and ... more

Dismiss