Bosnia’s GDP expands 1.7% y/y in Q3 2013 on rising agriculture and industrial output

By bne IntelliNews February 20, 2014

Bosnia’s GDP grew a real 1.7% y/y in the third quarter of 2013, recording the same growth rate as in the previous quarter, the statistics office said in a statement on February 19. The Q3 GDP growth was underpinned by higher manufacturing, utilities and agriculture sectors' output reflecting favourable weather conditions and strong external demand.

In Q1, Bosnia’s GDP expanded by a real 2.3% y/y after declining for four quarters in a row, partly reflecting low-prior year base.

In seasonally-adjusted terms, third-quarter GDP edged up 0.1% q/q, deteriorating from a 0.4% q/q increase in April-June and a 0.9% q/q growth in Q1. This is the first time the office publishes quarterly GDP data.

The manufacturing output, which accounted for 11.2% of the Q3 GDP, rose 8.3% y/y in July-September, slowing from an 11.1% y/y hike in the previous quarter. The agriculture sector (11.3% share) expanded 8.6% y/y in Q3, quickening from a 6.7% growth in Q2. The construction sector (holding a 4.3% share in GDP) swung to a 2.2% y/y growth in July-September from a 2.0% drop in Q2.

On the other hand, the wholesale and retail trade (12.9% share) and transportation and storage sectors (2.9% share) retreated by 3.4% y/y and 6.3% y/y, respectively, in Q3. The mining and quarrying sector (a 1.9% share) likewise declined 5.3% y/y in July-September, improving from a 9.4% annual contraction in the previous quarter.

Bosnia’s economy is projected to expand by a moderate 0.8% in 2013 after declining by 1.1% in 2012, on higher exports, industrial output and investments in the road and mining sectors, according to the IMF. Growth is forecast to strengthen to 2.0% in 2014, as expanding exports and large inflows of remittances will boost income and consumption. Higher public investments in infrastructure projects are also expected to support Bosnia’s economic activity in the near-term.

Rising social unrest since early February due to political inertia and high unemployment, as well as political uncertainties ahead of the October 2014 parliamentary elections will weigh on investors confidence. On the other hand, stronger than anticipated EU recovery will have a positive impact on growth through higher exports and remittances. Private consumption should remain depressed reflecting structurally high unemployment at over 44% as of end-2013.

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