This report covers the main macroeconomic releases from July 7 until August 6, 2014 as well as the financial and political events that took place in Bosnia during this period.
Bosnia’s GDP expanded a real 2.7% y/y in the first quarter of 2014 quickening from a 2.0% y/y growth in the previous three months, which was underpinned mainly by rising manufacturing, construction and wholesale and retail trade output.
Bosnia's authorities estimated the overall economic impact of the mid-May floods in the country at BAM 3.98bn (EUR 2.04bn) as damages amounted to BAM 2.49bn (9.3% of GDP), while losses equalled BAM 1.49bn. In Brussels was held the EU-sponsored donor conference, which has managed to mobilise EUR 809mn for Bosnia to face their financial needs.
The report also contains information about the Bosnia's Federation second revision of this year's budget. It speaks about major projects that Bosnia’s Serb Federation plans by 2015.
• CPI declined for the eleventh consecutive month in June 2014 going down 1.4% y/y reflected a sharper decrease in food, clothing and housing prices and a softer growth in health charges.
• Retail sales recorded 0.6% annual growth in June 2014 thanks to rising sales of non-food products and automotive fuel. IMF sees that private consumption in Bosnia will reach 1.3% this year.
• The number of employees in Bosnia grew 2.3% y/y in May 2014, while the average net monthly wage edged down by a nominal 0.2% y/y to BAM 830.
Table of Contents
EXECUTIVE SUMMARY 4
MACROECONOMIC OVERVIEW 5
Bosnia estimates economic impact of floods at EUR 2.04bn, nearly 15% of GDP 5
EU donor conference mobilises EUR 1.8bn for flood-hit Serbia and Bosnia 6
EBRD to provide up to EUR 158mn to support flood recovery in Bosnia 6
Flood-hit Bosnia to get up to EUR 87mn in EU financial aid 7
REAL SECTOR 7
1. GDP 7
Bosnia’s economic growth strengthens to 2.7% y/y in Q1 2014 7
Bosnia’s Federation GDP growth weakens to 1.9% y/y in Q1 2014 8
Bosnia’s Serb Republic GDP growth eases to 0.5% y/y in Q1 2014 9
Bosnia’s 2013 economic growth revised up to 2.5% 9
Bosnia's Federation 2013 GDP growth revised up to 2.8% 10
Bosnia’s consumer prices decline 1.4% y/y in June 2014 11
Bosnia’s PPI inches down 0.2% y/y in June 2014 12
3. Industry and Trade 13
Bosnia’s retail sales edge up 0.6% y/y in June 2014 13
4. Tourism 13
Foreign tourist arrivals to Bosnia down 2.2% y/y in Jan-May 2014 13
5. Labour Market 14
Bosnia’s number of employees rises 2.3% y/y in May 2014 14
Bosnia’s average net wage declines 0.2% y/y to EUR 424 in May 2014 14
FISCAL SECTOR, MONETARY POLICY 15
Bosnia’s indirect tax revenue rises 3.4% y/y to EUR 1.8bn in Jan-July 2014 15
Bosnia’s total public debt stays at EUR 5.32bn at end-2013 15
Bosnia’s external public debt drops 1.2% q/q to EUR 3.8bn at end-June 2014 16
Bosnia’s Federation sells out EUR 15mn issue of three-month T-bills 16
Bosnia’s Serb Republic sells EUR 5mn of nine-month T-bills 17
Bosnia’s M1 money supply growth eases to 7.8% y/y in June 2014 17
Bosnia’s FX reserves up 10.5% y/y at end-June 2014 17
FINANCIAL INTERMEDIATION 18
Bosnia’s bank assets growth strengthens to 5.5% y/y at end-June 2014 18
Bosnia’s bank deposits rise 7.8% y/y to EUR 7.4bn at end-June 2014 19
EXTERNAL SECTOR 20
Bosnia’s trade gap widens 13% y/y to EUR 1.74bn in January-June 2014 20
Bosnia’s Directorate for Economic Planning cuts 2014 FDI forecast to up to EUR 307mn 20
STRUCTURAL REFORMS, CORPORATE PLANS 21
Bosnia’s Serb Republic plans major energy projects by 2025 21
Bosnian energy producer Elektroprivreda HZ HB unblocks Aluminij's accounts 22
Bosnia’s state-level parliament adopts 2014 budget revision 22
Bosnia's Federation govt adopts second revision of 2014 budget 23
Bosnia’s Federation approves state guarantees on EUR 77mn bank loans for motorway construction projects 24
Release Date: Wed, 06 Aug 2014