Bosnia’s 2013 current account gap narrows 40% y/y to EUR 734mn, equalling to 5.5% of GDP

By bne IntelliNews March 25, 2014

Bosnia’s current account deficit shrank 39.8% to BAM 1,435.4mn (EUR 734mn) in 2013 after declining 5.1% the year before, mainly due to falling foreign trade gap and higher investment income from abroad, central bank data showed. The 2013 current account gap equalled to 5.5% of the full-year GDP forecast, down from 9.3% a year ago, according to IntelliNews calculations.

The foreign trade deficit improved to 29.7% of GDP (BAM 7.8bn) from 32.9% of GDP (BAM 8.4bn) a year earlier as exports increased while imports declined over the period. Sales abroad rose markedly by 8.7% to BAM 5.5bn in 2013. Imports, on the other hand, contracted by 1.5% to BAM 13.3bn, reflecting subdued domestic demand.

Higher primary income account surplus which was underpinned by rising investment revenue (up 7.4% to BAM 113.1mn) also contributed to the 2013 gap narrowing. The surplus of the service account, likewise, increased by 3.1% on the year to BAM 2.3bn as higher income from tourism offset falling construction and processing services revenue.

The surplus of the financial account shrank 54.1% to BAM 832.7mn last year. Net FDI rose a mild 5.1% to BAM 507.1mn over the period. They covered over 35% of the current account deficit, up from 22% the year before.

According to the IMF, Bosnia's current account gap will continue narrowing in 2014 reflecting rising exports and weak domestic demand contributing to slow import growth.

Bosnia's balance of payments (BAM mn) 2012 2013  y/y, %
Current account -2,382.7 -1,435.4 -39.8
Foreign trade balance (goods) -8,445.0 -7,801.7 -7.6
Services 2,187.4 2,254.7 3.1
Primary income 232.2 512.9 120.9
Secondary income* 3,642.6 3,598.7 -1.2
Capital account 335.5 337.4 0.6
Financial account** -1,814.1 -832.7 -54.1
Net FDI -534.3 -507.1 -5.1
Portfolio investments 17.6 132.4 652.3
Other investments -1,370.1 -1,166.9 -14.8
Net errors and ommissions 233.0 265.2 -54.0
Source: CBBH; *includes current transfers between residents and non-residents ; **calculated as assets abroad (outflow) minus liabilities (inflow)

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