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Bosnia and Herzegovina: Economic and Political Outline
Economic Indicators | Foreign Trade in Figures | Sources of General Economic Information | Political Outline
Since 1995, Bosnia-Herzegovina was living under the Constitution resulting from the Dayton peace accords, which ended the inter-ethnic conflict of 1992-1995 that destroyed much of the Bosnian economy and infrastructure. In 2005 Bosnia and Herzegovina began negotiations - still ongoing in 2012 - for its EU accession. Since then, major political, social and economic changes have been accomplished, particularly in banking and tourism. GDP has been growing at a steady pace in recent years (+ 2.2% in 2011).
Nevertheless, corruption and the high level of unemployment are major hurdles to the country's economic development. In addition, agriculture was largely privatized, a fact that increased the net import of food products.
The global economic crisis did not spare the country, despite the small integration of the Bosnian economy into the international channels. The crisis drew attention to the frailty of public finance, manifested by the weight of public spending and the intensification of the current deficit caused by the reduction in transfers from the Bosnian diaspora all over the world.
In November 2011, Bosnia and Herzegovina were accorded an EU grant aid of 200 million euros. This money was crucial for the country, which can no longer rely on foreign investors, whose commitments have collapsed since 2007 due to the global financial crisis and economic difficulties of the EU and namely some of Bosnia's important trading partners (Croatia, Italy ...).
Cripled by political blockages since October 2010, the country is now stagnating.
| Main Indicators | 2009 | 2010 | 2011 | 2012 (e) | 2013 (e) |
| GDP (billions USD) | 17.05e | 16.53 | 18.34 | 19.39 | 20.63 |
| GDP (Constant Prices, Annual % Change) | -2.9 | 0.7 | 2.2 | 3.0 | 4.0 |
| GDP per Capita (USD) | 4,367 | 4,242e | 4,715 | 4,993 | 5,320 |
| General Government Gross Debt (in % of GDP) | 35.9 | 39.7e | 39.6e | 38.4 | 35.7 |
| Inflation Rate (%) | -0.4 | 2.1 | 4.0 | 2.5 | 2.5 |
| Unemployment Rate (% of the Labor Force) | 24.1 | 27.2 | 27.6 | 27.0 | 26.0 |
| Current Account (billions USD) | -1.06 | -0.92 | -1.14e | -1.08 | -1.10 |
| Current Account (in % of GDP) | -6.2 | -5.6e | -6.2 | -5.3 | - |
Source: IMF - World Economic Outlook Database ; World Bank , Last Available Data
Note: (e) Estimated Data
The agricultural sector accounts for 8% of the GDP.
The industry sector represents up to almost 29% of the GDP. The flourishing sectors are the services and light industry. However, the industry sector shrunk at the end of 2008 and in the following years, especially due to a fall in both domestic and European demand. Although its production capacities have now been restored, the Bosnian economy is still facing considerable difficulties.
Lastly, the tertiary sector contributes aroun 63% of the GDP.
The trading sector is the one that gathers the highest number of providers, followed by the manufacturing, business services, transport and construction industry sectors.
Bosnia and Herzegovina mainly produces metal products. Given the country's substantial resources, the wood industry ranks second in total exports. Other important production sectors are mineral and chemical products, machinery, mechanical appliances, textile and footwear.
| Breakdown of Economic Activity By Sector | Agriculture | Industry | Services |
| Value Added (in % of GDP) | 8.1 | 28.8 | 63.1 |
| Value Added (Annual % Change) | 0.5 | 0.5 | -4.3 |
Source: World Bank - Last Available Data.
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| Monetary Indicators | 2006 | 2007 | 2008 | 2009 | 2010 |
| Bosnian Mark (BAM) - Average Annual Exchange Rate For 1 USD | 1.56 | 1.43 | 1.34 | 1.41 | 1.48 |
Source: World Bank - Last Available Data.
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Distribution of Economic freedom in the world
Source: 2011 Index of Economic freedom, Heritage Foundation
Note: The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labor freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.
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The country is open to foreign trade and does not have any non-tariff trade barriers. The customs duties are relatively low for most of the products. Anti-dumping and compensatory duties are sometimes imposed to protect the local industry.
One of the main attractions of the country is the establishment of Free Trade Zones. Investors are free to invest capital in the Free Trade Zones, transfer their profits and re-transfer capital. Customs duties and tariffs are not payable on imports into these zones. Furthermore, equipment (except passenger vehicles, slot and gambling machines), which is imported as part of share capital is exempt from customs duties.
Bosnia and Herzegovina's trade balance is traditionally a deficit one. This trend is expected to continue in the coming years because of the effects of the crisis and especially because of the drop in industrial production in the EU, which had a negative effect on the local industries. However, exports (steel and aluminum) are increasing and this will allow the trade balance to recover in the next coming years.
| Foreign Trade Indicators | 2007 | 2008 | 2009 | 2010 | 2011 |
| Imports of Goods (million USD) | 9,720 | 12,189 | 8,773 | 9,223 | 11,048 |
| Exports of Goods (million USD) | 4,152 | 5,021 | 3,954 | 4,803 | 5,851 |
| Imports of Services (million USD) | 571 | 705 | 625 | 581 | 546 |
| Exports of Services (million USD) | 1,454 | 1,659 | 1,396 | 1,280 | 1,299 |
| Imports of Goods and Services (Annual % Change) | 16.6 | -1.9 | -4.5 | -3.9 | - |
| Exports of Goods and Services (Annual % Change) | 12.6 | 4.2 | -3.5 | 11.3 | - |
| Imports of Goods and Services (in % of GDP) | 73.3 | 69.4 | 58.0 | 62.3 | - |
| Exports of Goods and Services (in % of GDP) | 38.9 | 36.8 | 33.4 | 40.7 | - |
| Trade Balance (million USD) | -5,704 | -7,097 | -4,754 | -4,293 | - |
| Trade Balance (Including Service) (million USD) | -4,852 | -6,080 | - | - | - |
| Foreign Trade (in % of GDP) | 112.1 | 106.2 | 91.4 | 103.0 | - |
Source: WTO - World Trade Organization ; World Bank , Last Available Data
| Main Customers (% of Exports) |
2010 |
| Germany | 15.3% |
| Croatia | 15.1% |
| Serbia | 12.5% |
| Italy | 12.1% |
| Slovenia | 8.6% |
| See More Countries | 36.3% |
| Main Suppliers (% of Imports) |
2010 |
| Croatia | 15.1% |
| Serbia | 10.5% |
| Germany | 10.5% |
| Italy | 8.9% |
| Russia | 8.7% |
| See More Countries | 46.3% |
Source: Comtrade, Last Available Data
Source: Comtrade, Last Available Data
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Governmental function is performed by the Council of Ministers of BiH. After a new structure has been defined in 2002 by the High Representative, the Council of Ministers of BiH has nine members: Chairman, two Vice Chairmen being at the same time ministers, plus other six ministers. Chairman and members of the Council of Ministers hold a four year mandate. Each minister has a deputy. The function of the Secretary of the ministry has also been introduced. Candidates are elected to these functions in line with ethnic criterium in order to avoid that these functions are performed by representatives of only one or only two nationalities.
Presidency of BiH appoints the Chairman of the Council of Ministers, who takes over the duties after the House of Representatives of the Parliamentary Assembly of BiH confirms appointment. Chairperson proposes candidates for ministers, to be appointed by the House of Representatives. Bosnia and Herzegovina has nine ministries covering the following areas: foreign affairs, foreign trade and economic relations, civil affairs, finance and treasury, human rights and reffugees, justice, communications and transport, security, defense.
Source: Worldwide Press Freedom Index 2011, Reporters Without Borders
Note: The world rankings, published annually, measures the violations of press freedom worldwide. It reflects the degree of freedom enjoyed by journalists, the media and digital citizens of each country and the means used by states to respect and uphold this freedom. Finally, a note and a position is assigned to each country. To compile this index, Reporters Without Borders (RWB) prepared a questionnaire sent to partner organizations,150 RWB correspondents, journalists, researchers, jurists and activists of human rights, including the main criteria - 44 in total - to assess the situation of press freedom in a given country. It includes every kind of direct attacks against journalists and digital citizens (murders, imprisonment, assault, threats, etc.) or against the media (censorship, confiscation, searches and harassment etc.).
Map of freedom 2010
Source: Freedom House
Note: The Indicator of Political Freedom provides an annual evaluation of the state of freedom in a country as experienced by individuals. The survey measures freedom according to two broad categories: political rights and civil liberties. The ratings process is based on a checklist of 10 political rights questions (on Electoral Process, Political Pluralism and Participation, Functioning of Government) and 15 civil liberties questions (on Freedom of Expression, Belief, Associational and Organizational Rights, Rule of Law, Personal Autonomy and Individual Rights). Scores are awarded to each of these questions on a scale of 0 to 4, where a score of 0 represents the smallest degree and 4 the greatest degree of rights or liberties present. The total score awarded to the political rights and civil liberties checklist determines the political rights and civil liberties rating. Each rating of 1 through 7, with 1 representing the highest and 7 the lowest level of freedom, corresponds to a range of total scores.
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Last Updates: May 2012