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
EXECUTIVE SUMMARY 4
REAL SECTOR 5
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
FISCAL SECTOR 14
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
MONETARY POLICY 20
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
FINANCIAL INTERMEDIATION 23
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
EXTERNAL SECTOR 26
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
STRUCTURAL REFORMS, CORPORATE PLANS 29
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
Release Date: Tue, 08 Jul 2014