In the first 10 months of work, the current Government of the Federation of Bosnia and Herzegovina recorded positive economic indicators and with its measures curbed the dizzying rise in prices, ensured an increase in wages and pensions, reduced inflation to the lowest in the region, and through employment programs reduced the number of unemployed, said the Federal Minister of Trade Amir Hasicevic.
The project “Locking prices” brought savings to consumers, and by limiting the prices of energy products and stimulating the payment of aid to workers, the economic crisis caused by the dizzying growth of the inflation rate in the previous two years was amortized, as he pointed out in the interview for Fena news agency.
The lowest inflation in the region
We would like to remind you that inflation reached a record value of 17.5 percent in October 2022, then gradually decreased and in 2023 it averaged 6 percent, in accordance with the forecasts of the Central Bank of Bosnia and Herzegovina, and in 2024 it is expected to further decrease to 3 percent.
When the Federation of BiH itself is singled out, according to the data of the Federal Bureau of Statistics, inflation in that entity in January 2024 was 1.1 percent and is the lowest in the region. As for Bosnia and Herzegovina, it is about 2 percent in total.
“We managed to reach the lowest level with these measures, and if we add to that that we have a slight GDP growth, I think that all these measures speak in favor of these moves that the Federal Government undertook in the previous period,” Minister Hasičević said.
For the sake of comparison, inflation in the eurozone was recorded at 2.8 percent in January, while in February it was 2.6 percent. According to the statistical data of neighboring countries, inflation in February 2024 in Serbia was 5.6 percent, in Montenegro 4.4 percent, in Croatia 4.1 percent, in Slovenia 3.4 percent, in North Macedonia 3.0 percent, in Albania 2 .6 percent.
The government tried to use some of the effects of inflation as an incentive.
“Inflation inevitably fills the budget, but I think that this government recognized that and that it managed to return part of the inflationary influx to production and part to the most socially vulnerable categories. I think this policy will be maintained,” Hasičević pointed out.
Consumer prices
Minister Hasičević believes that prices will remain stable, without unplanned disturbances on the market. In January 2024, consumer prices rose on average by 0.2 percent compared to the previous month, while in February they rose by 0.6 percent.
The biggest contribution to the growth of inflation was made by the departments of transportation and restaurants and hotels, where prices rose by 2.1 percent each.
“In 2023, we returned the number of overnight stays to the record year of 2019. Well, if we look at it from that aspect, then we are glad that inflation or prices are rising in that sector, given that the majority of those overnight stays, over 70 percent, are foreign guests. tells us again about the next strategic move, that we would have to work significantly on increasing our tourist offer”, asserted the federal minister of trade.
On the other hand, clothes and shoes are cheaper than in 2023, as well as housing, water, electricity, gas and other energy sources. Transportation and communication costs are somewhat cheaper.
Retail trade turnover in December 2023 was 8 percent higher than in December 2022.
Probable increase in wages
The minister stated that further salary increases are likely in the coming period.
“Given that we intervene in the part we can, which is within the framework of the minimum hourly wage, i.e. minimum wages, and I think that this reform will certainly come in the set of reform laws, but on the market there is an increase in the number of employees and an increase in wages at the same time. If we are talking about future projections of the market, i.e. supply and demand will do that,” stated Minister Hasičević.
He says that they already have a situation where employers turn to the government with a request to liberalize the import of labor, “and I know from experience that our workers are much more valuable and much better and deserve a much higher salary”.
“The market alone will lead to an increase in wages in the coming period and if we increase the minimum wage, we will find a compromise, while reducing the cumulative contribution rate, which will further contribute to the improvement of the standards of our citizens,” underlined the federal minister of trade.
Reason for concern – coverage of imports by exports
The time is challenging, with numerous crises that can disrupt the economy throughout Europe. The biggest reason for concern in Bosnia and Herzegovina is the constant growth of the trade deficit, meaning the coverage of imports by exports.
“We actually import a part of this inflation because the processing industry is the bearer of all imports and exports, so we import a part through that raw material. We are dependent on food imports, which is unfortunately one of the biggest problems. This year, the Government is more than ever has prepared incentives for agriculture through the new Strategy, in two directions. One direction is import substitution, and the other is an increase in exports, primarily in the processing industry,” explained Hasičević.
According to him, another very important segment, talking about oil and oil derivatives, is that “we depend on about the market so that those prices are transmitted to us”.
However, he states that the Government retains the regulation from the framework of the law on price control. Thanks to that, according to the latest indicators and business analysis, gas stations in the Federation of BiH are the cheapest oil and oil derivatives in the region.