Economic Overview

For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.

Nowadays, Bosnia and Herzegovina is considered an upper-middle-income country, achieving great results since 1995, year in which an inter-ethnic conflict - that destroyed much of the Bosnian economy and infrastructure, increased unemployment and decreased production - came to an end. However, the economy still lacks competitiveness and the government launched a structural reforms program for 2019-2021 to boost private investments and exports. Following a recession caused by the outbreak of the COVID-19 pandemic, the economy grew an estimated 2.8% in 2021, mostly driven by household consumption (accounting for around three-quarters of GDP). The IMF forecasts a GDP growth of 3.3% this year, followed by 3% in 2023, although uncertainty persists due to the weak vaccination rollout and political instability.

The general government balance was negative by 2.1% of GDP in 2021; however, the public accounts of the country's three constituent entities (Central State, Federation of Bosnia and Herzegovina and Republika Srpska) are expected to improve markedly in 2022 thanks to a marked economic recovery. Albeit relatively low, the debt-to-GDP ratio increased from a pre-pandemic level of 32.5% to 38.9% in 2021. The ratio is forecast to remain somewhat stable in the short term (at 40.1% in 2023 – IMF). The government does not have access to markets, but it receives financing from several multilateral institutions, including the EBRD (around EUR 105 million in 2021 in partnership with the private sector) and the EU Commission (EUR 250 million in June and EUR 80.5 million in September 2021). Higher energy prices prompted an increase in inflation, which spiked to 1.8% in 2021, the same level it is expected to attain this year (IMF).

Corruption and the high level of unemployment are major hurdles to the country's economic development. The unemployment rate stood at 15.8% in 2021 and is expected to remain stable over the forecast horizon. Addressing bottlenecks causing persistent long-term unemployment, such as enhancing formal labour market participation (especially for women) and reducing skills mismatches for youth will be key. The country’s GDP per capita (PPP) is low, estimated at USD 15,935 in 2021 by the IMF.

Foreign Trade

Bosnia and Herzegovina is open to foreign trade and is expanding its global partner network. Its trade-to-GDP ratio is 83.3% (World Bank, latest data available). Overall, trade development is still hampered by low productivity levels, limited access to finance and administrative barriers to trade. Custom duties are relatively low for most products, but various non-tariff barriers are in place. Anti-dumping and countervailing duties are sometimes imposed to protect the local industry if the price of the merchandise is below the domestic market price or if it is subsidised. Bosnia and Herzegovina seeks to attract higher foreign investment through Free Trade Zones within the country that allow investors to invest capital in specific areas, transfer their profits and re-transfer capital. Customs duties and tariffs are not payable on imports into these zones. Furthermore, equipment (except passenger vehicles, slots and gambling machines) imported as part of share capital is exempt from customs duties. The country mainly exports seats (4.8%), electrical energy (4.7%), furniture (3.4%), and wood sawn (3.1%); importing petroleum oils (5.7%), motor cars (3.6%), medicaments (3.1%), and coal (1.8% - Comtrade, 2020).

The country's main export partners in 2020 were Germany, Croatia, and Serbia, accounting for respectively 15.5%, 12.9% and 11.6% of total export; followed by Italy (9.7%) and Austria (9.5%). Its main suppliers were Germany (12.3%), Italy (11.5%) Serbia (11.3%), and Croatia (9%). Overall, the EU is the biggest trading partner.

COVID-19 Country Response

COVID-19 epidemic evolution

To find out about the latest status of the COVID-19 pandemic evolution and the most up-to-date statistics on the COVID-19 disease in Bosnia and Herzegovina, please visit the official portal of the Federal Ministry of Health Covid-19.ba. For statistics concerning the Republic of Srpska, refer to the Public Health Institute website (in Serbian).
For the international outlook you can consult the latest situation reports published by the World Health Organisation as well as the global daily statistics on the coronavirus pandemic evolution including data on confirmed cases and deaths by country.

Sanitary measures

To find out about the latest public health situation in Bosnia and Herzegovina and the current sanitary measures in vigour, please consult the website of the Public Health Institute of the Republic of Srpska and that of the Federal Ministry of Health of BiH (in Bosnian), including the up-to-date information on the containment measures put in place and public health recommendations.
Click here to consult the resolution of the Council of Ministers declaring the state of emergency.

Travel restrictions

The COVID-19 situation, including the spread of new variants, evolves rapidly and differs from country to country. All travelers need to pay close attention to the conditions at their destination before traveling. Regularly updated information for all countries with regards to Covid-19 related travel restrictions in place including entry regulations, flight bans, test requirements and quarantine is available on TravelDoc Infopage.
It is also highly recommended to consult COVID-19 Travel Regulations Map provided and updated on the daily basis by IATA.
The US government website of Centers of Disease Control and Prevention provides COVID-19 Travel Recommendations by Destination.
The UK Foreign travel advice also provides travelling abroad advice for all countries, including the latest information on coronavirus, safety and security, entry requirements and travel warnings.

Import & export restrictions

The authorities of Bosnia and Herzegovina have not adopted any specific measure applicable to movement of goods during the period of sanitary emergency due to the COVID-19 outbreak. Please consult the portal of the Customs Sector of the Indirect Taxation Authority for further updates.
For a general overview of trade restrictions due to COVID-19 pandemic, please consult the section dedicated to Bosnia and Herzegovina on the International Trade Centre's COVID-19 Temporary Trade Measures webpage.

Economic recovery plan

To know about the economic measures taken by the national government to address the impact of the COVID-19 pandemic on the economy, please consult the following link and the website of the Council of Ministers of Bosnia and Herzegovina. Further details and updates can be found on the country-specific guide by Deloitte.
For the general overview of the key economic policy responses to the COVID-19 outbreak (fiscal, monetary and macroeconomic) taken by the Bosnian government to limit the socio-economic impact of the COVID-19 pandemic, please consult the section dedicated to Bosnia and Herzegovina in the IMF’s Policy Tracker platform.

Support plan for businesses

For the information on the local business support scheme and taxation measures established by the government of Bosnia and Herzegovina to help businesses to deal with the economic impacts of the COVID-19 epidemic on their activity, please consult the country-specific guide by Deloitte.
For a general overview of international SME support policy responses to the COVID-19 outbreak refer to the World Bank's Map of SME-Support Measures in Response to COVID-19.

Support plan for exporters

The government of the Federation of Bosnia and Herzegovina established a special fund to support export companies that are facing difficulties due to the effects of the pandemic on their export markets.
For updates, visit the website of the Council of Ministers of Bosnia and Herzegovina.