Bosnia-Herzegovina Business Forecast Report Q1 2013 - new country guide report
The economic recovery is losing momentum alongside the escalation in the eurozone sovereign debt crisis. We expect economic activity to pick up in 2013, but warn that further demand destruction in the single currency area could slam the breaks on Bosnia's fragile recovery.
A central government may have finally been agreed, but political instability remains a lingering concern.
The highly fractious state of Bosnian politics means that future reform moment will likely be anaemic, preventing the country from realising its full growth potential.
Major Forecast Changes
We have revised our 2012 current account deficit estimate to 7.4% of GDP from 6.4% previously.
Key Risks To Outlook
Downside Risks To Growth: With much depending on external demand, the risk of a slowdown in Bosnia's key export partners elsewhere in Europe could threaten the recovery and our growth projections.
Upside Risks To Inflation: Since the economic downturn, inflation has been fairly subdued. However, there are risks of a surge in imported inflationary pressures given the recent surge in some global agricultural prices such as corn and wheat.