Bosnia’s current account deficit shrank 42.2% y/y to BAM 1,123mn (EUR 574mn) in January-September 2013, thanks to falling foreign trade gap and higher investment income from abroad, central bank data showed. The nine-month current account gap equalled to 4.3% of the full-year GDP forecast, down from 7.6% a year earlier, according to IntelliNews calculations.

The January-September foreign trade deficit improved to 21.4% of GDP (BAM 5.6bn) from 24.7% of GDP (BAM 6.3bn) a year ago as exports increased while imports declined over the period. Sales abroad rose markedly by 9.0% y/y to BAM 4.1bn in January-September, reflecting improved economic activity and low prior-year base. Imports, on the other hand, contracted by 3.6% y/y to BAM 9.7bn. 

Higher primary income account surplus which was underpinned by rising investment revenue (up 14.6% y/y to BAM 90mn) also contributed to the January-September gap narrowing. The surplus of the service account, likewise, increased by 4.3% on the year at BAM 1.7bn as higher income from tourism offset falling processing services revenue.

The surplus of the financial account shrank 46.3% y/y to BAM 761mn in January-September, despite strong increase of net FDI. The latter climbed 37% to BAM 518mn over the period. They covered over 46% of the current account deficit, up from just 19% the year before.

Bosnia's 2012 current account gap narrowed 1.7% to BAM 2.5bn after widening by close to 66% in 2011, mainly due to higher service (transport, travel and construction) revenue which offset slower increase of the foreign trade gap.