This report covers the main macroeconomic releases for Bosnia from February 5 until March 5, 2014 as well as the financial and political events that took place in the country during this period.

In early February, Bosnian citizens, mostly in the Muslim-Croat Federation, started protests against the unemployment, corruption, and overall inability of the heavy political and administrative system to function. The protests began in the northern town of Tuzla with the angry workers of several bankrupt companies calling for the cantonal government to resign and seeking revision of the privatization of their firms and the payment of arrears in wages. The social unrest spread to Sarajevo, Mostar, Zenica, and Bihac.

On the economic front, local analysts warned that the current state of affairs in Bosnia could significantly slow down investment activity in the country. Bosnia’s GDP grew a real 1.7% year on year in the third quarter of 2013, recording the same growth rate as in the previous quarter. The Q3 GDP growth was underpinned by higher output in the manufacturing, utilities, and agriculture sectors, reflecting favorable weather conditions and strong external demand. The jobless rate remained flat in both annual and monthly terms at 44.5% at end-December 2013, the country’s unemployment agency said.

Key Points:

• Bosnia's government sector foreign debt rose 3.5% year on year to EUR 3.78bn at end-2013, supported mainly by rising liabilities to the EIB, the EBRD and the European Commission.

• The foreign trade deficit shrank 15.6% year on year to EUR 181.3mn. The monthly export-import coverage ratio improved to 64.7% in January from 59.2% a year ago.

• Commercial banks assets rose 5.3% year on year to EUR 11.9bn at end-January, quickening from a 5.1% year on year increase at end-December, due to stronger lending activity. Loan growth speeded to 3.3% year on year in January and was above the 2013 average of 2.8%.

• Bank deposits increased 7.8% year on year EUR 7.3bn at end-January, following a 6.9% year on year hike at end-December due to both stronger retail and corporate deposit collection.

• Bosnia’s central bank gross foreign reserves grew 11.0% year on year to EUR 3.6bn, speeding up from a 8.6% year on year hike at end-December.

• The international high representative in Bosnia, Valentin Inzko, said that the EU might intervene in Bosnia if the violent protests against the economic hardship and political corruption escalate.