SARAJEVO (Bosnia and Herzegovina), January 19 (SeeNews) – UniCredit bank said it has downgraded its economic outlook for Bosnia and Herzegovina to 2.5% in 2016, from an earlier predicted 2.8%, following weaker growth in the second half of the year.
"Domestic private consumption remains the main driver of growth due to a rise in households’ real disposable income, while exports and, especially, investment activity are still subdued," the lender said in a quarterly publication made available by its Slovenian unit.
In 2017, UniCredit said it expects an acceleration of growth towards 3%, supported by a recovery in investment and export demand, strong personal consumption, and rising employment and households’ real disposable income.
Consumer price growth of close to 2% year-on-year is also expected this year, the lender noted, adding that the fiscal position has stabilized as tax collection has strengthened substantially, while spending remains under control.
According to UniCredit, Bosnia will soon resolve issues causing delays in accessing a tranche of the EFF arrangement agreed with the International Monetary Fund in September which will ensure its fiscal sustainability.
It, however, warned that progress in advancing crucial reforms and the growth outlook remain dependent on the fragile and unconvincing decision-making process.
Earlier this month, the World Bank said it expects Bosnia’s real economic growth to mildly accelerate to 3.2% this year, from 2.8% last year, before picking up to 3.7% in 2018.