The Central Bank of Bosnia and Herzegovina (CBBiH) has revised its estimate of real GDP growth for the first quarter of 2025 to 2.2%, which represents a decrease of 0.4 percentage points compared to the previous round of rapid estimates. This slowdown indicates the growing challenges faced by the BiH economy, partly caused by a decline in domestic demand and weakness in industrial production.
Retail trade has been recording a decline since the beginning of the year, while at the same time, the manufacturing industry continues to contribute negatively to overall growth.
“The preliminary estimate of the annual real GDP growth rate for the second quarter of 2025 is 2.5%, primarily due to the expected more intense growth in service sector activity, while we estimate overall inflation in the second quarter of the year at 3.3%, and core inflation at 4.0%. Our preliminary estimate of overall inflation in the third quarter of 2025 is 3.0%, and core inflation is 4%. Inflation in the observed period is predominantly driven by the rise in food and service prices, which have had an upward trend due to higher input costs. A significant contribution to the rise in input costs also comes from the increase in the minimum wage, which had a chain effect on wage growth in all sectors,” state the CBBiH, adding that in the coming period, they expect strengthening inflationary pressures also due to possible shocks in the prices of goods traded on international markets, primarily energy sources.
Although short-term estimates of economic activity and inflation are in line with the medium-term projections published in April, uncertainties related to the estimates, primarily inflation, are very pronounced even in the short term.
