Political uncertainty remains main risk to Bosnia’s economic growth, World Bank says

Political uncertainty remains main risk to Bosnia’s economic growth, World Bank says
By bne IntelliNews October 19, 2017

Political uncertainty remains the main risk to Bosnia & Herzegovina’s medium-term outlook as the lack of agreement between entities could delay reforms, the World Bank said in the October edition of its Europe and Central Asia Economic Update.

Yet, the country is making a progress on its Reform Agenda, a wide-reaching reform package intended to support Bosnia’s progress towards EU accession, and domestic demand is rising, which will support the GDP in 2017-2019.

Rising domestic demand is expected to remain the main driver for Bosnia’s economic growth, which is seen above 3.0% a year in the medium term. GDP is expected to rise by 3% this year, slightly down from an estimated 3.1% in 2016, but should accelerate to 3.2% next year and to 3.5% in 2019.

“This is considerably lower than the estimated 6 percent growth needed for BiH to catch up to EU income levels by 2037 and close the gap with other transition economies that are already part of the EU,” the report noted.

The global lender projected that investments in the country will post a moderate growth rise due to slow improvements in the business environment, delays in the construction of transport corridor Vc and projects in the energy and tourism sectors, as well as uncertainty about tax reform implementation.

World Bank's macroeconomic outlook for Bosnia
  2016e 2017f 2018f 2019f
GDP growth 3.1% 3.0% 3.2% 3.5%
- Private consumption 1.8% 2.9% 3.4% 3.6%
- Government consumption 1.8% 3.7% 3.4% 2.6%
- Gross fixed capital investment 1.7% 1.6% 2.9% 3.5%
Inflation -0.8% 0.9% 1.4% 1.4%
Current account balance (% of GDP) -4.5% -4.6% -5.9% -6.8%
Debt (% of GDP) 41.1% 39.5% 37.9% 35.8%
Source: the World Bank

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