Bosnian and Herzegovina's economic activity grows 4.2%

Bosnian and Herzegovina's economic activity grows 4.2%

The Central Bank of Bosnia and Herzegovina CBBH predicted the growth of real economic activity in the second quarter of 2022 at 4.2%, based on available information until mid-September 2022.

Retail trade, industrial production and exports, all monthly data shows that the growth of the domestic economy was also recorded in the second quarter. The expected growth of economic activity in BH implies a real annual growth of 4.8% in the first half of 2022. In the second quarter a significant growth of real GDP was recorded in the EU, as well as other neighbouring countries, which had a positive impact on domestic economic activity, despite the disruption in global supply chains and the rise in food and energy prices. Economic activity is expected to slow down in the second half of the year, due to the continued unfavourable factors, mainly in the supply of natural gas and electricity.

On the basis of official data from July 2022, inflation was 16.7%. The total annual inflation growth could be expected to be around 14% in 2022, but there is a high degree of uncertainty related to this projection. The projections are the strongest uncertainties related to future price trends in international markets, and the effects of policies aimed at limiting some prices and revoke of excise duties, which can decrease the expected inflation growth in the current year.

Consumer prices in BH are higher than the euro area's average of 6 percentage points in 2022, which is higher than the average of 6 percentage points.

Food prices in BH were higher by 19.3% during the first seven months. These prices at the EU level increased by 8.8% in the same period. In almost all subcategories of food, higher growth rates were recorded in the local market in relation to comparable countries, which was particularly visible in case of oils and fats. Countries in the region have been restricting the growth of basic prices of food, which has decreased inflation to some extent.