The World Bank said on Tuesday it expects Bosnia’s real economic growth to mildly decelerate to 2.8% this year, from 3.0% last year, before picking up speed to 3.2% in 2017.
If structural reforms in the country are carried out as planned, GDP growth will reach 3.7% in 2018, the World Bank’s said in a country forecast, part of its latest South East Europe Regular Economic Report. The report covers six countries of the region (SEE6) – Albania, Bosnia, Kosovo, Macedonia, Montenegro, and Serbia.
Bosnia's economic growth has helped increase employment and alleviate poverty in the region, the bank noted. The unemployment rate in Bosnia and Herzegovina is expecrted to decrease to 25.4% at the end of 2016, from 27.7% last year and 27.5% in 2014.
Consumer price deflation in Bosnia is forecast to widen to 1.5% at the end of this year from 1.3% at end-2015. Zero inflation is projected for both 2017 and 2018.
The World Bank forecasts that public expenditure in Bosnia will rise to 43.7% of the GDP by the end of this year, from 42.6% in 2015, and climb further to 44.4% before decreasing to 43.6% in 2018.
Bosnia's public debt is expected to continue falling from last year's 41.9% – to 41.5% at end-2016, 39.7% in 2017 and 37.4% in 2018. External debt is expected to contract,too, reaching 74.3% of the GDP this year, from 76.6% last year, and continue to drop to 72.1% and 70.0% in 2017 and 2018, respectively.
According to the World Bank, GDP growth in the SEE6 region will accelerate from 2.2% in 2015 to 2.7% in 2016, driven by robust investment and recovering household consumption.
After several years of moderation, consumption is also expected to gain speed, mainly fuelled by improvements in the labour markets of Albania, Kosovo, and Serbia and higher public wages and transfers in Macedonia and Montenegro.