Bosnia-Herz. Economic Outlook
After slowing in Q2, annual economic growth seemingly picked up in Q3 amid a cooling inflationary backdrop: Both consumer and producer price pressures softened in the quarter, which contributed to sturdier growth in retail sales and a marginal rebound in industrial output. That said, merchandise exports continued to shrink in Q3 and in October, indicating that external headwinds remained a drag on activity. In other news, in early November, the European Commission recommended that the European Council start accession talks with the country as soon as it meets the Commission’s 14 priorities. While the country only fulfills two requirements at the moment, the chairwoman of the Council of Ministers expects it to meet all of them by end-2023. That said, the recent escalation of judiciary tensions in Republika Srpska poses a concern for EU institutions, boding poorly for accession talks.
Inflation fell to 4.1% in September from 4.7% in August. The decline was driven by softer price pressures for food and non-alcoholic beverages, housing and utilities, and clothing. In 2024, inflation is set to more than halve from this year’s projected levels amid stabilizing commodity prices.