Bosnia Country Report - June, 2014

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Bosnia Country Report - June, 2014

This report covers the main macroeconomic releases from June 3 until July 7, 2014 as well as the financial events that took place in Bosnia during this period.
The IMF downgraded its forecast for Bosnia's 2014 economic growth to 0.7% from 2.0% as a result of the mid-May floods. The Fund sees the damage they caused to the country at 5-10% of GDP. The total flood damage, including economic losses, is estimated at EUR 1-1.5bn.
On the economic front, consumer prices declined for the tenth month in a row in May 2014 but at a slightly slower rate than in April. The producer price index (PPI) on the domestic market inched down 0.9% y/y in April, widening from a 0.6% y/y decline in March.
Bosnia’s jobless rate edged down to 43.7% at end-April 2014 from 44.1% a month earlier. Also, it was lower compared to its end-2013 level of 44.5%.
Bosnia’s consolidated budget swung into a net surplus of BAM 81.8mn (EUR 41.8mn) in the first quarter of 2014 from a BAM 66.2mn deficit a year ago. The three-month budget surplus was equal to 0.3% of the full-year GDP forecast, the same as a year earlier.
Bosnia’s government sector foreign debt rose 2.6% q/q to BAM 7.6bn (EUR 3.89bn) at end-March 2014, supported mainly by rising liabilities to the EIB, the EBRD and the World Bank.
The central bank’s gross foreign reserves grew 10.8% y/y to BAM 7.09bn (EUR 3.63bn) at end-May 2014, slightly easing from an 11.0% y/y hike the month before. The reading equalled to 26.1% of the full-year GDP projection.
The commercial banks’ assets rose 5.1% y/y to BAM 23.6bn (EUR 12.1bn) at end-May 2014, quickening from a 4.8% annual growth the month before mainly supported by stronger lending activity. The assets accounted for 87.1% of the full-year GDP forecast, up from 84.8% a year ago.

Table of Contents

1. GDP, 5
IMF says floods to slow down Bosnia's 2014 economic growth to 0.7%, sees flood damage at 5-10% of GDP 5
Devastating floods to halve Bosnia's expected 2014 GDP growth to 0.5% - c-banker 7
Downside risks to sustained economic recovery substantial in Serbia, Bosnia, Montenegro - World Bank 8
Bosnia’s GDP per capita at 29% of EU average in 2013 - Eurostat 9
2. Inflation 9
Bosnia’s consumer prices decline 1.3% y/y in May 2014 9
Bosnia’s PPI drops 0.9% y/y in April 2014 11
3. Industry and Trade 11
Bosnia’s Serb Republic retail sales decline 15.3% y/y in May 2014 11
4. Tourism 11
Foreign tourist arrivals to Bosnia decrease 2.0% y/y in Jan-April 2014 11
5. Labour Market 12
Bosnia’s jobless rate inches down to 43.7% at end-April 2014 – employment agency 12
Bosnia’s jobless rate inches down to 44.1% at end-March 2014 – employment agency 13
Bosnia’s number of employees increases 2% y/y in April 2014 13
Bosnia’s average net wage increases 0.9% y/y to EUR 425.4 in April 2014 13
Bosnia’s consolidated budget turns to EUR 41.8mn surplus in Q1 2014 14
Bosnia’s gross indirect tax revenue increases by 4.5% y/y to EUR 1.22bn in Jan-May 2014 15
Bosnia’s indirect tax revenue rises 2.6% y/y to EUR 1.5bn in H1 2014 15
Bosnia’s state-level budget posts EUR 7.7mn surplus in Q1 2014 15
Bosnia’s Federation budget posts EUR 20mn surplus in Q1 2014 16
Bosnia’s Serb Republic public revenues up 5% y/y to EUR 536.1mn in H1 2014 16
Bosnia’s Serb Republic public revenue rises 7% y/y to EUR 448mn in Jan-May 2014 17
Bosnia Serb Republic govt liabilities at domestic banks up 7.9% y/y at end-April 2014 17
Bosnia’s Serb Republic sells EUR 20mn of five-year T-bonds 18
UniCredit Bank Banja Luka lends Bosnia's Serb Republic govt EUR 50mn 18
IMF approves Bosnia EUR 191.4mn loan disbursement from augmented stand-by deal 19
World Bank approves EUR 100mn loan to Bosnia to support flood recovery 19
Bosnia’s M1 money supply growth quickens to 8.4% y/y in May 2014 20
Bosnia’s M1 money supply growth quickens to 7.3% y/y in April 2014 21
Bosnia’s FX reserves growth slows down to 10.8% y/y at end-May 2014 21
Bosnia’s FX reserves growth quickens to 11% y/y at and-April 2014 22
Bosnia’s bank assets growth speeds up to 5.1% y/y at end-May 2014 23
Bosnia’s bank assets growth speeds up to 4.8% y/y at end-April 2014 24
Bosnia’s bank deposits rise 7.9% y/y to EUR 7.5bn at end-May 2014 24
Bosnia’s bank deposits rise 7.4% y/y to EUR 7.4bn at end-April 2014 25
Moody's says banking systems of Balkan states on threshold of recovery, sees region’s 2014 GDP up 2% 25
Bosnia’s external public debt climbs 2.6% q/q to EUR 3.9bn at end-March 2014 26
Bosnia’s current account gap widens 23% y/y to EUR 262.7mn in Q1 2014 27
Bosnia’s trade gap widens 12% y/y to EUR 1.43bn in January-May 2014 28
FDI inflows to Bosnia down 9.3% to USD 332mn in 2013 - UNCTAD 28
Bosnia's EPBiH plans EUR 1.3mn dividend for 2013, signs concession for 13 MW Janjici hydropower plant 29
Bosnia’s Federation net electricity production shrinks 14% y/y in Jan-May 2014 29
Bosnia hires OHL-led consortium in EUR 39.6mn state prison project 30

Number of pages: 30
Release Date: Tue, 08 Jul 2014