The World Bank expects Bosnia and Herzegovina’s economic growth of four percent in 2022, but internal and external risks are still present, it was stressed today in Sarajevo during the presentation of the report World Bank regular economic review for the Western Balkan countries.
The report was presented by World Bank Office Manager in Bosnia and Herzegovina and Montenegro, Christopher Sheldon, and World Bank Senior Economist in Bosnia and Herzegovina, Sandra Hlivnjak, who said that the economic performance of six Western Balkan economies are still under the influence of the war in Ukraine and the resulting sharp rise in energy prices and slowing global growth.
“Even though growth in the first half of this year has far exceeded expectations for BiH, it is clear that current market shocks may affect the country’s medium-term outlook. The outlook in the region is affected by a combination of shocks. BiH’s close ties to the region and tighter global financing conditions, as well as the expected slowdown in domestic and foreign demand, will also impact BiH’s outlook,” Sheldon said.
Economic growth, driven by consumption and investment in the first half of this year, as Hlivnjak said, turned out to be strong, exceeding expectations.
“In Bosnia and Herzegovina, like in all other Western Balkan countries, growth has been registered. In 2021, this growth surprised us all and reached 7.5% according to data from the Agency for Statistics of Bosnia and Herzegovina (BHAS). Growth continued in the first quarter (5.8%) and second quarter (5.9%) of this year,” Hlivnjak added.
Regarding the consumption situation, as she said, this is not a long-term sustainable model for Bosnia and Herzegovina, because the increase in consumption does not create additional value and cannot create new jobs and have a more productive impact on the progress of an economy. She pointed out that there was an increase in employment in all the countries of the region, including in Bosnia and Herzegovina.
“What is problematic and what worries all of us at the World Bank, but I suppose also all households in Bosnia and Herzegovina, is the continuous growth of inflation, which is mainly of an imported nature. The trade deficit is widening due to the increase in imports, the exports are also increasing, but this dominance of imports is so large that in the net balance, the trade deficit is still large and contributes to the increase in the current account deficit added Hlivnjak.
She pointed out that growth will continue in the coming period and that for 2022, due to slowing growth factors, it is expected to be around four percent, which as she said. said, is certainly good, but not enough to significantly initiate stronger growth. structural reforms. In the medium term, continued growth is also expected, but on some lower fundamentals also subject to risk, so there may be a further revision to that growth depending on how the risks play out .
“With regard to domestic risks, among them are increased political uncertainty and poor implementation of reforms, while foreign risks, among others, refer to the presence of war in Ukraine and geopolitical tensions “, said Hlivnjak.