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Bosnia Country Report - February, 2014

  • April 2014
  • -
  • Emerging Markets Direct Media Holdings
  • -
  • 20 pages

This report covers the main macroeconomic releases for Bosnia from February 5 until March 5, 2014 as well as the financial and political events that took place in the country during this period.



In early February, Bosnian citizens, mostly in the Muslim-Croat Federation, started protests against the unemployment, corruption, and overall inability of the heavy political and administrative system to function. The protests began in the northern town of Tuzla with the angry workers of several bankrupt companies calling for the cantonal government to resign and seeking revision of the privatization of their firms and the payment of arrears in wages. The social unrest spread to Sarajevo, Mostar, Zenica, and Bihac.



On the economic front, local analysts warned that the current state of affairs in Bosnia could significantly slow down investment activity in the country. Bosnia's GDP grew a real 1.7% year on year in the third quarter of 2013, recording the same growth rate as in the previous quarter. The Q3 GDP growth was underpinned by higher output in the manufacturing, utilities, and agriculture sectors, reflecting favorable weather conditions and strong external demand. The jobless rate remained flat in both annual and monthly terms at 44.5% at end-December 2013, the country's unemployment agency said.



Key Points:



oBosnia's government sector foreign debt rose 3.5% year on year to EUR 3.78bn at end-2013, supported mainly by rising liabilities to the EIB, the EBRD and the European Commission.



oThe foreign trade deficit shrank 15.6% year on year to EUR 181.3mn. The monthly export-import coverage ratio improved to 64.7% in January from 59.2% a year ago.



oCommercial banks assets rose 5.3% year on year to EUR 11.9bn at end-January, quickening from a 5.1% year on year increase at end-December, due to stronger lending activity. Loan growth speeded to 3.3% year on year in January and was above the 2013 average of 2.8%.



oBank deposits increased 7.8% year on year EUR 7.3bn at end-January, following a 6.9% year on year hike at end-December due to both stronger retail and corporate deposit collection.



oBosnia's central bank gross foreign reserves grew 11.0% year on year to EUR 3.6bn, speeding up from a 8.6% year on year hike at end-December.



oThe international high representative in Bosnia, Valentin Inzko, said that the EU might intervene in Bosnia if the violent protests against the economic hardship and political corruption escalate.

Table Of Contents

Bosnia Country Report - February, 2014
Executive Summary

1. Macroeconomic Overview

1.1 IMF says progress in agreed reforms conditional for approval of next loan tranche to Bosnia



2. Real Sector

2.1 GDP, Inflation

2.1.1 Bosnia's GDP expands 1.7% y/y in Q3 2013 on rising agriculture and industrial output



2.2 Industry and Trade

2.2.1 Bosnia's Federation distributive trade turnover declines 5.7% to EUR 8.2bn in 2013

2.2.2 Bosnia's Serb Republic distributive trade turnover rises 2.2% y/y in Q4 2013



2.3 Construction

3.1 Number of completed housing units in Bosnia drops 30.4% in 2013



2.4 Tourism

2.4.1 Foreign tourist arrivals to Bosnia rise 21% y/y in 2013



2.5 Labor Market

2.5.1 Bosnia's jobless rate flat at 44.5% at end-Dec 2013 - employment agency

2.5.2 Bosnia's number of employees rises 1% y/y in Dec 2013

2.5.3 Bosnia's average net wage edges up 0.8% y/y to EUR 428 in Dec 2013



3. Fiscal Sector, Monetary Policy

3.1 Bosnia's revenue from indirect taxes drops to 17.2% of GDP in 2013

3.2 Bosnia's Federation sells out EUR 10.2mn issue of three-month T-bills

3.3 Bosnia's FX reserves growth quickens to 11% y/y at end-Jan 2014



4. Financial Intermediation

4.1 Bosnia's bank assets rise 5.3% y/y to EUR 12bn at end-Jan 2014

4.2 Bosnia's bank deposits growth speeds up to 7.8% y/y at end-Jan 2014

4.3 Combined turnover of Bosnia's two bourses more than doubles y/y to EUR 60mn in Dec 2013



5. External Sector

5.1 Bosnia's external public debt climbs 3.5% y/y to EUR 3.78bn at end-2013

5.2 Bosnia's trade gap narrows 16% y/y to EUR 181mn in Jan 2014

5.3 Bosnia attracts 34% less FDI worth EUR 145mn in 2013 - Directorate for Economic Planning



6. Structural Reforms, Corporate Plans

6.1 EBRD invests over EUR 200mn in Bosnia's private sector in 2013



7. Politics

7.1 International overseers might send EU troops to Bosnia if social unrest escalates - Inzko

7.2 Bosnians protest again as Federation's government sends to parliament snap vote amendments

7.3 Most Bosnians support ongoing protests but only half believe they will yield results - poll

7.4 EU's Fuele says result of Sejdic-Finci meeting with Bosnian politicians deeply disappointing

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