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.
Agriculture Products
wheat, corn, fruits, vegetables; livestock
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
6.7% (2007 est.)
Labor Force
1.026 million (2001)
Electricity production
12.84 billion kWh (2006 est.)
Electricity Consumption
8.501 billion kWh (2006 est.)
Electricity Exports
5.123 billion kWh (2006 est.)
Electricity Imports
3.015 billion kWh (2006 est.)
Unemployment Rate
45.5% official rate; grey economy may reduce actual unemployment to 25-30% (31 December 2004 est.)
Population Below Poverty Line
Household Income or Consumption by Percentage Share
Lowest 10%: 3.9%
Highest 10%: 21.4% (2001)
Distribution of Family Income Gini Index
26.2 (2001)
Budget
Revenues: $7.094 billion
Expenditures: $7.137 billion (2007 est.)
Public Debt
34% of GDP (2007 est.)
Commercial Bank Prime Lending Rate
Stock of Domestic Credit
$8.895 billion (31 December 2007)
Market Value of Publicly Traded Shares
$NA
Reserves of Foreign Exchange and Gold
$4.525 billion (31 December 2007 est.)
Debt External
$6.734 billion (31 December 2007 est.)
Stock of Direct Foreign Investment at Home
Stock of Direct Foreign Investment Abroad
Exchange Rates
Exchange rates: konvertibilna markas (BAM) 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
