October 5 (SeeNews) - The World Bank said it expects Bosnia and Herzegovina's economic output to increase by 4% in 2022, improving the 2.7% economic growth forecast made in June.
In 2023, Bosnia's gross domestic product (GDP) is projected to grow by 2.8%, the World Bank said in its Europe and Central Asia Economic Update October 2022 report published on Tuesday.
However, there are downside risks to Bosnia's economic growth forecast, such as continued effects of the war in Ukraine, war-related uncertainties and sanctions, which could lower demand for Bosnian exports, the World Bank noted.
Unfavourable labour market changes in the EU could also decrease remittances inflows, which support private consumption in Bosnia. Furthermore, geopolitical risks could further aggravate domestic political frictions, affecting efforts for structural reforms, the report reads.
Average annual inflation in Bosnia is projected to reach 11% in 2022, before it slows down to 2% in 2023 and 0.5% in 2024.
The GDP growth of the Western Balkans region is forecast at 3.4% in 2022, down from 7.7% in 2021.
"Growth is projected to remain at an average of 2.9 percent over the forecast horizon, as EU accession reforms and investment mitigate the negative impacts imposed by higher energy and food prices, disruptions to trade and investment flows, and spillovers from the slowdown in euro area activity," the World Bank noted referring to the Western Balkans.