December 10 (SeeNews) - Bosnia's economy is expected to contract by 4.6% this year, hit by the Covid-19 pandemic, and to recover only partially by growing 2.7% in 2021 and by 3.0% in 2022, the central bank said.
"Stagnation will be felt in all the sectors of society and economy, and real GDP growth above 3% is not expected in the next two years. With such moderate growth rates, reaching the pre-crisis level of economic activity is expected in 2022 at the earliest," the central bank, CBBH, said in a statement on its key macroeconomic projections for 2020-2022 on Wednesday.
The CBBH added that its previous projection for a stronger recovery in 2021 was pushed back to the end of 2022 primarily due to the intensity of the second wave of the pandemic\, but also because of the weaker than expected effect of government spending on the country's economic activity in the current year.
In 2020, all components of the gross domestic product (GDP), apart from government spending, are expected to decline steeply.
Personal consumption is seen shrinking sharply due to unfavorable developments on the labour market, decreasing foreign remittances, reduced lending activity, and declining consumer optimism.
"In future announcements, the current projections for 2021 and 2022 may be subject to stronger revisions if the epidemiological situation does not improve by the end of the first half of next year, and if the negative effects on economic activities of major trading partners are significantly worse than our projected assumptions," the CBBH said, adding it will issue its next medium-term macroeconomic projections report for 2021-2023 in May.
The current projections could be adjusted upwards, if the epidemiological situation improves already in the first half of 2021, with the the introduction of anti-Covid 19 vaccines, which would result in a faster recovery of tourism and related businesses.
An intensification of public investment and a possible implementation of long-announced structural reforms will also result in improving the current projects, the central bank said.
Here are some of the CBBH's latest macroeconomic forecasts for 2020-2022 (pct change, y/y):
|
2019 |
2020 estimate |
2021 estimate |
2022 estimate |
Real GDP |
2.6 |
-4.6 |
2.7 |
3.0 |
Inflation (CPI) |
0.6 |
-0.6 |
0.5 |
0.9 |
Personal spending |
2.4 |
-5.3 |
2.7 |
2.2 |
Government spending |
2.3 |
4.0 |
2.8 |
0.7 |
Investments |
6.2 |
-13.3 |
9.6 |
12.9 |
Net exports (% of GDP) |
-16.4 |
-15.3 |
-16.8 |
-17.8 |