Bosnia and Herzegovina saw positive economic developments in early 2024, including low inflation levels and steady GDP expansion. Inflation year-on-year (y/y) averaged 1.7% in 2024, peaking at 2.2% in December. The real GDP growth remained consistent at a 2.5% average annual rate of year-over-year growth. This uniform advance signalized an underlying strength in every calendar quarter of the year.
Food and non-alcoholic beverages contributed heavily to CPI. In 2024, they will be over 50% of the headline CPI. This contribution skyrocketed to almost 80% in the first quarter of 2025. Combined, this trend suggests that consumers are starting to experience more acute stress from escalating costs. Lastly, the average inflation rate for that same quarter jumped to 3.3% y/y, indicating a rapid centralization of inflationary trends.
The current account (C/A) deficit was an internal pressure for the Bosnian economy, at -4% of GDP in 2024. The gap increased to 1.7 percentage points during the year. This shift occurred largely due to the impact of the scenario of strong external conditions damaging trade balance values. The external environment ended up being really harsh to trade, putting even more stress on the economy.
Looking forward, analysts do not predict much improvement, with the 2025 current account deficit seen as essentially the same as that of 2024. Perhaps the brightest spot of all is the optimism for a marked improvement by 2026. According to recent forecasts, the current account deficit is expected to diminish by about half a percentage point of GDP. GDP growth is set up for leveling off, and that’s a trending outlook that should linger into 2025. This ongoing expansion should further insulate the economy from longstanding inflationary headwinds.