Intellinews Bosnia and Herzegovina Country Report - Jul 2012

The IntelliNews Bosnia and Herzegovina Country Report is a monthly report, covering the major macroeconomic indicators and trends in Bosnia and Herzegovina, as well as important political developments. Prepared by local analysts, it provides the most accurate data, updated regularly according to the data changes noted by the whole range of statistics sources. It will save the time you would need to track the figures and sources independently and will provide you with thorough analysis.

The IMF agreed to extend USD 500mn stand-by loan to Bosnia if the country manages to implement agreed fiscal measures by September, when the Fund’s board is due to approve the agreement. Meanwhile, IMF officials said the Bosnian economy is facing renewed difficulties in 2012 and therefore the projected zero GDP growth might prove to be overly optimistic.

The EBRD also cut its 2012 economic growth estimate for Bosnia to 0.3% from 0.4%, saying domestic consumption remains weak due to falling remittances and fiscal austerity.

Bosnia’s central bank also lowered its full-year GDP growth projection to 0.6% from 1.6% as figures from the first months of 2012 indicate negative economic performance. Governor Kemal Kozaric expects the country might enter into recession as of September because of the deteriorating industrial production, imports, exports and the poor agriculture season.

On the positive side, Moody's has confirmed Bosnia’s B3 sovereign ratings and raised the outlook to stable from negative after concluding a review for a possible downgrade, noticing the encouraging developments in the IMF talks and the progress on the EU agenda. This might, however, be shadowed by the emerging new political crisis among Bosnia’s main political players, which threatens to result in a new delay in the country’s EU candidacy application.

Bosnia's annual consumer price inflation remained unchanged at 1.9% in June. The industrial production declined by an annual 6.7% in the first half of the year. June retail trade turnover fell 3.9% in the Federation and dropped 5.6% in the Serb Republic.

The H1 trade deficit widened 4.7% y/y to EUR 1.77bn. The commercial banks’ total assets rose by 2.2% on the year to EUR 11.1bn at end-June but were down 0.2% on the month. The gross foreign reserves managed by the central bank rose 2.76% on the month to EUR 3bn at the end of June.