Bosnia and Herzegovina: Economy Overview

04 February 2010
by Ina Dimireva -- last modified 04 February 2010

In 2009, Bosnia's economy was hurt by the global financial downturn, with GDP, exports, and employment all showing declines. One of Bosnia's main challenges has been to cut public sector wages and social benefits to meet the IMF's budget deficit criteria and qualify for additional tranches of Fund aid.

Economy Overview

The interethnic warfare in Bosnia and Herzegovina caused production to plummet by 80% from 1992 to 1995 and unemployment to soar. With an uneasy peace in place, output recovered in 1996-99 at high percentage rates from a low base; but output growth slowed in 2000-02. Part of the lag in output was made up in 2003-08 when GDP growth exceeded 5% per year. Banking reform accelerated in 2001 as all the Communist-era payments bureaus were shut down; foreign banks, primarily from Western Europe, now control most of the banking sector. The konvertibilna marka (convertible mark or BAM)- the national currency introduced in 1998 - is pegged to the euro, and confidence in the currency and the banking sector has increased. Bosnia's private sector is growing and foreign investment is slowly increasing, but government spending, at nearly 40% of adjusted GDP, remains high because of redundant government offices at the state, entity and municipal level. Implementing privatization, however, has been slow, particularly in the Federation where political division between ethnically-based political parties makes agreement on economic policy more difficult. A sizeable current account deficit and high unemployment rate remain the two most serious macroeconomic problems. Successful implementation of a value-added tax in 2006 provided a predictable source of revenue for the government and helped rein in gray market activity. National-level statistics have also improved over time but a large share of economic activity remains unofficial and unrecorded. Bosnia and Herzegovina became a full member of the Central European Free Trade Agreement in September 2007.

GDP (purchasing power parity):

$29.25 billion (2009 est.)
country comparison to the world: 105
$30.12 billion (2008 est.)
$28.55 billion (2007 est.)
note: data are in 2009 US dollars
Bosnia has a large informal sector that may be as much as 50% of official GDP.

GDP (official exchange rate):

$16.96 billion (2009 est.)

GDP - real growth rate:

-2.9% (2009 est.)
country comparison to the world: 161
5.5% (2008 est.)
6% (2007 est.)

GDP - per capita (PPP):

$6,300 (2009 est.)
country comparison to the world: 130
$6,600 (2008 est.)
$6,300 (2007 est.)
note: data are in 2009 US dollars

GDP - composition by sector:

agriculture: 10.2%
industry: 23.9%
services: 66% (2009 est.)

Labor force:

1.863 million (2009 est.)
country comparison to the world: 123

Labor force - by occupation:

agriculture: 19.8%
industry: 32.6%
services: 47.6% (2007)

Unemployment rate:

40% (2009 est.)
country comparison to the world: 188
29% (31 December 2004 est.)
note: official rate; gray economy may reduce actual unemployment to 25-30%

Budget:

revenues: $7.814 billion
expenditures: $8.571 billion (2009 est.)

Inflation rate (consumer prices):

0.6% (2009 est.)
country comparison to the world: 33
7.3% (2008 est.)

Commercial bank prime lending rate:

6.98% (31 December 2008)
country comparison to the world: 121
7.17% (31 September 2007)

Stock of domestic credit:

$10.26 billion (31 December 2008)
country comparison to the world: 71
$8.895 billion (31 December 2007)

Agriculture - products:

wheat, corn, fruits, vegetables; livestock

Industries:

steel, coal, iron ore, lead, zinc, manganese, bauxite, vehicle assembly, textiles, tobacco products, wooden furniture, tank and aircraft assembly, domestic appliances, oil refining

Industrial production growth rate:

11.6% (2008 est.)
country comparison to the world: 4

Oil - production:

0 bbl/day (2008 est.)
country comparison to the world: 117

Natural gas - production:

310 million cu m (2008 est.)
country comparison to the world: 98

Current account balance:

$-1.599 billion (2009 est.)
country comparison to the world: 143
$-2.764 billion (2008 est.)

Exports:

$4.363 billion (2009 est.)
country comparison to the world: 109
$5.194 billion (2008 est.)

Exports - commodities:

metals, clothing, wood products

Exports - partners:

Croatia 20.7%, Slovenia 16.7%, Italy 16.7%, Germany 13%, Austria 10.3%, Hungary 4.8% (2008)

Imports:

$9.952 billion (2009 est.)
country comparison to the world: 86
$12.29 billion (2008 est.)

Imports - commodities:

machinery and equipment, chemicals, fuels, foodstuffs

Imports - partners:

Croatia 24.6%, Slovenia 12.7%, Germany 12.3%, Italy 10.5%, Hungary 6.6%, Turkey 6.5%, Austria 6.3% (2008)

Debt - external:

$8.415 billion (31 December 2009 est.)
country comparison to the world: 85
$7.388 billion (31 December 2008 est.)

Exchange rates:

konvertibilna markas (BAM) per US dollar - 1.4352 (2009), 1.3083 (2008), 1.4419 (2007), 1.5576 (2006), 1.5727 (2005)
note: the convertible mark is pegged to the euro

Source: CIA - The World Factbook