Bosnia and Herzegovina Economy - overview

Economy - overview: Bosnia and Herzegovina ranked next to The Former Yugoslav Republic of 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. Industry has been greatly overstaffed, one reflection of the socialist economic structure of Yugoslavia. TITO had pushed the development of military industries in the republic with the result that Bosnia hosted a number of Yugoslavia's defense plants. The bitter interethnic warfare in Bosnia caused production to plummet by 80% from 1990 to 1995, unemployment to soar, and human misery to multiply. 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. GDP remains far below the 1990 level. Economic data are of limited use because, although both entities issue figures, national-level statistics are limited. Moreover, official data do not capture the large share of black market activity. The marka - the national currency introduced in 1998 - is now pegged to the euro, and the Central Bank of Bosnia and Herzegovina has dramatically increased its reserve holdings. Implementation of privatization, however, has been slow, and local entities only reluctantly support national-level institutions. Banking reform accelerated in 2001 as all the Communist-era payments bureaus were shut down. The country receives substantial amounts of reconstruction assistance and humanitarian aid from the international community but will have to prepare for an era of declining assistance.

Definition: This entry briefly describes the type of economy, including the degree of market orientation, the level of economic development, the most important natural resources, and the unique areas of specialization. It also characterizes major economic events and policy changes in the most recent 12 months and may include a statement about one or two key future macroeconomic trends.

Source: CIA World Factbook - Unless otherwise noted, information in this page is accurate as of April 17, 2003