The expected inflation trend in Bosnia and Herzegovina is similar to that in the euro area – a strong inflationary shock in 2022, estimated at 14.4 per cent, is to weaken gradually during the next two years.
Strong reforms
This was said for „Dnevni avaz“ by Governor of the Central Bank of BH Senad Softić, stressing that expected inflation of 6.1 per cent in this year and 3 per cent in 2024 respectively means that real available income will be under strong pressure.
– Which will additionally slow down both nominal, and also real economic activity in the country. Despite unexpectedly strong economic activity in the first half of 2022, which was also the case in other countries, official data already support our estimates of economy slowing down in the second half of 2022. In 2023, we expect further slow down of economic activity, but not recession – Softić said.
He believes that granting of candidate status for the EU membership to BH, especially if accompanied with strong reforms, could bring about a strong growth of economic activity.
– Growth of economic activity would not be necessarily accompanied with inflation growth. I believe that, as early as in mid term, a serious commitment to improvement of macroeconomic conditions and business climate in the country would result in the weakening of negative trends in labour market and the growth of private investment. This would not only strengthen economic activity in mid term but also long term economic potential- Softić stressed.
Norms and rules
He emphasized that the candidate status is the first step in a series of numerous, very serious reforms related to the adoption of EU norms and rules, regulations and standards in a wide range of areas, including the economy and the rule of law.
– When you have an economy that functions according to all the stated postulates and standards, you become very attractive to investors, both foreign and domestic, and their capital. In any case, the status of a candidate with obligations to fulfill the necessary prerequisites carries many long-term benefits, including financial ones – said Softić.
Projection circle
Softić says that the latest information, which comes from the relevant supranational institutions, signals that the contraction of economic activity in 2023 in some of the most developed countries, including the global economy, could be milder than expected.
– The more optimistic among them even signal that some of the countries, including our trading partners, could completely avoid recession. In that case, our projections of real economic activity in BH in the medium term could be revised upwards with the May round of projections – said Softić.
– The Law on the CBBH defines that the Presidency of BH appoints the members of the Governing Board of the CBBH who choose the Governor from among themselves, Softić said about the appointment of the new Governor.
