Bosnia and Herzegovina Economy Profile 2008

Economy - overview

Bosnia and Herzegovina ranked next to Macedonia as the poorest republic in the old Yugoslav federation. Although agriculture is almost all in private hands, farms are small and inefficient, and the republic traditionally is a net importer of food. The private sector is growing and foreign investment is slowly increasing, but government spending, at nearly 40% of adjusted GDP, remains unreasonably high. The interethnic warfare in Bosnia caused production to plummet by 80% from 1992 to 1995 and unemployment to soar. With an uneasy peace in place, output recovered in 1996-99 at high percentage rates from a low base; but output growth slowed in 2000-02. Part of the lag in output was made up in 2003-07 when GDP growth exceeded 5% per year. National-level statistics are limited and do not capture the large share of black market activity. The konvertibilna marka (convertible mark or BAM)- the national currency introduced in 1998 - is pegged to the euro, and confidence in the currency and the banking sector has increased. Implementing privatization, however, has been slow, particularly in the Federation, although more successful in the Republika Srpska. Banking reform accelerated in 2001 as all the Communist-era payments bureaus were shut down; foreign banks, primarily from Western Europe, now control most of the banking sector. A sizeable current account deficit and high unemployment rate remain the two most serious macroeconomic problems. On 1 January 2006 a new value-added tax (VAT) went into effect. The VAT has been successful in capturing much of the gray market economy and has developed into a significant and predictable source of revenues for all layers of government. Bosnia and Herzegovina became a full member of the Central European Free Trade Agreement in September 2007. The country receives substantial reconstruction assistance and humanitarian aid from the international community but will have to prepare for an era of declining assistance.

GDP (purchasing power parity)

$29.89 billion
note: Bosnia has a large informal sector that could also be as much as 50% of official GDP (2007 est.)

GDP (official exchange rate)

$14.2 billion (2007 est.)

GDP - real growth rate

5.5% (2007 est.)

GDP - per capita (PPP)

$6,600 (2007 est.)

GDP - composition by sector

agriculture: 10.2%
industry: 23.9%
services: 66% (2006 est.)

Population below poverty line

25% (2004 est.)

Household income or consumption by percentage share

lowest 10%: 3.9%
highest 10%: 21.4% (2001)

Inflation rate (consumer prices)

1.5% (2007 est.)

Labor force

1.026 million (2001)

Labor force - by occupation

agriculture: NA%
industry: NA%
services: NA%

Unemployment rate

45.5% official rate; grey economy may reduce actual unemployment to 25-30% (31 December 2004 est.)

Distribution of family income - Gini index

26.2 (2001)

Budget

revenues: $6.952 billion
expenditures: $7.094 billion (2007 est.)

Public debt

39% of GDP (2007 est.)

Industries

steel, coal, iron ore, lead, zinc, manganese, bauxite, vehicle assembly, textiles, tobacco products, wooden furniture, tank and aircraft assembly, domestic appliances, oil refining

Industrial production growth rate

8% (2007 est.)

Electricity - production

12.22 billion kWh (2005)

Electricity - consumption

8.574 billion kWh (2005)

Electricity - exports

3.58 billion kWh (2005)

Electricity - imports

2.174 billion kWh (2005)

Oil - production

0 bbl/day (2005)

Oil - consumption

26,000 bbl/day (2005 est.)

Oil - imports

24,940 bbl/day (2004)

Oil - exports

0 bbl/day (2004)

Oil - proved reserves

0 bbl (1 January 2006 est.)

Natural gas - production

0 cu m (2005 est.)

Natural gas - consumption

383.6 million cu m (2005 est.)

Natural gas - exports

0 cu m (2005 est.)

Natural gas - imports

383.6 million cu m (2005)

Natural gas - proved reserves

0 cu m (1 January 2006)

Current Account Balance

-$2.021 billion (2007 est.)

Agriculture - products

wheat, corn, fruits, vegetables; livestock

Exports

$3.923 billion f.o.b. (2007 est.)

Exports - commodities

metals, clothing, wood products

Exports - partners

Croatia 19.6%, Slovenia 16.7%, Italy 15.4%, Germany 12.3%, Austria 8.7%, Hungary 5.3% (2006)

Imports

$9.294 billion f.o.b. (2007 est.)

Imports - commodities

machinery and equipment, chemicals, fuels, foodstuffs

Imports - partners

Croatia 24%, Germany 14.5%, Slovenia 13.2%, Italy 10%, Austria 5.9%, Hungary 5.2% (2006)

Reserves of foreign exchange and gold

$4.5 billion (31 December 2007 est.)

Debt - external

$7.057 billion (31 December 2007 est.)

Market value of publicly traded shares

$NA

Economic aid - recipient

$546.1 million (2005 est.)

Currency (code)

konvertibilna marka (convertible mark) (BAM)

Exchange rates

konvertibilna maraka per US dollar - 1.4419 (2007), 1.5576 (2006), 1.5727 (2005), 1.5752 (2004), 1.7329 (2003)
note: the convertible mark is pegged to the euro

Fiscal year

calendar year