IMF projects 2.5% economic growth for Bosnia and Herzegovina in 2024

The International Monetary Fund (IMF) Resident Representative in Bosnia and Herzegovina, Andreas Tudyk, announced 2.5% projected economic growth for 2024, driven by rising private consumption, wages, and modest investment increases. However, recent flood-related developments may prompt a downward revision. Tudyk highlighted risks such as Europe's economic slowdown, political tensions, and expansionary fiscal policies that could threaten fiscal stability. Inflation has dropped from 17.4% in October 2022 to 0.8%, with an average of 2.2% expected in 2024, stabilizing at 2% by 2025. Fiscal challenges include rising social spending and public sector wages, pushing the fiscal deficit to a projected 2.2% in 2024 and 2025. Tudyk stresses the need for fiscal reforms, including spending cuts and rebuilding fiscal buffers, while maintaining the currency board and monitoring monetary risks. The Bosnian economy remains moderately indebted, with most borrowing tied to infrastructure projects, and is heavily dependent on major trading partners like Germany, Italy, Austria, and Hungary, where stagnation and limited growth have impacted industrial production and export demand. The IMF projects Bosnian economic growth at 2.5% to 2.8% in 2024, contingent on effective reforms and stable external conditions.