The European Bank for Reconstruction and Development (EBRD) has reduced the projection of Bosnia and Herzegovina’s (BiH) GDP growth for 2025 to 2.2 percent. At the same time, the bank kept the projection of BiH’s GDP growth in 2026 at 2.7 percent.
Economic growth in the first quarter of 2025 slowed to 1.7 percent compared to the previous year, driven by wage growth and remittances. Economic growth was limited by reduced external demand and domestic political instability. The current account deficit continued to grow during the same period, after nearly doubling in 2024. Inflation in July 2025 reached 4.8 percent compared to the previous year, driven by an increase in real wages and expansive fiscal policy.
It is projected that real GDP growth will amount to 2.2 percent in 2025 and rise to 2.7 percent in 2026. Significant risks arise from the decline in industrial production, increased trade uncertainty, the slowdown of the European economy, volatility in commodity markets, and the continuation of political tensions.
Economic growth in the Western Balkans is expected to remain modest in the next two years.
Projections show that the region will grow on average 2.7 percent in 2025, and rise to 3.2 percent in 2026, as persistent global uncertainty and weak European Union (EU) demand continue to burden exports, trade, investments, and remittances. Economies dependent on tourism, such as Albania and Montenegro, are particularly affected by uncertainty in EU markets, while export-oriented countries such as Serbia, BiH, and North Macedonia face slower trade growth.
