The international rating agency Standard and Poor’s (S&P) maintained the credit rating of Bosnia and Herzegovina, ‘B+’ with a stable outlook, announced the Central Bank of Bosnia and Herzegovina.
In the report for Bosnia and Herzegovina, S&P analysts state that in the period 2024 – 2027, economic growth will increase by about three percent in real terms, thanks to higher consumption due to the reduction of inflationary pressures, several investment projects and strengthening of external demand. Despite internal and external challenges, as stated, the economy of Bosnia and Herzegovina showed resilience during 2023, with real GDP growth estimated at around two percent, after an expansion of almost four percent in 2022.
The slowdown in economic growth is a consequence of weaker performance in Bosnia and Herzegovina’s key trade partners, mainly from the European Union, and the impact of high inflation on private demand. The bright spot, according to analysts, is the strong expansion of tourism of 15 percent in the first three quarters of 2023, which supported the country’s economic growth.
From 2024, according to S&P analysts, Bosnia and Herzegovina will record economic growth that will be supported by the economic recovery of key trade partners in the eurozone, which should stimulate export growth. Inflation fell to 1.7 percent in November, which is expected to affect real wage growth and private consumption. Also, several large investment projects are expected, especially in the field of energy and road construction, which will support growth over the next few years, the Central Bank of Bosnia and Herzegovina announced.
The net debt of Bosnia and Herzegovina is about 20 percent of GDP, which is a moderate debt for developing countries. Analysts expect the current account deficit to remain at a low level for the next four years. Bosnia and Herzegovina is also expected to retain the currency board arrangement.
According to analysts, an increase in the credit rating may occur if consensus-based political decisions are reached, which, in the medium term, could accelerate reforms and economic growth.
