Bosnia and Herzegovina expects slow economic growth in 2023 but not recession

(Patria) - In Sarajevo today, 01/30/2023, organized by Color Media Communications, in partnership with the Central Bank of Bosnia and Herzegovina (CBBH), and with the support of the Delegation of the European Union to BiH and the British Embassy in BiH, a conference titled "The World in 2023" was held.

The conference is one of the oldest conferences organized by Color Media Communications and has already become recognizable in the region as an event that contributes to a better understanding of the challenges facing the economy in Bosnia and Herzegovina through its discussions on the business, political, and social environment, and offers certain recommendations in that regard.

Opening the conference, CBBH Governor Senad Softić stated that, according to the CBBH projection, Bosnia and Herzegovina expects a slowdown in economic activity in 2023, but not a recession. Likewise, a slowdown in inflationary pressures is expected in the next two years. The interest rates of the European Central Bank and its overall monetary policy also influence the CBBH. The largest part of the banking sector is capital-linked with banks from the European Monetary Union, which also affects the policy of banks in BiH. However, banks in BiH have primarily relied on domestic sources of financing for years, which are currently mostly short-term. Demand for loans remains relatively weak, and banks rigorously assess the creditworthiness of their clients.

"In such an environment, the transmission mechanism of the ECB's interest rates to the domestic financial system is relatively weak," said Governor Softić.

He added that only a stable CBBH, which respects the principles of the currency board, can guarantee macroeconomic stability in BiH.

"The answer to the question of how to accelerate growth in BiH should not be sought in changing the currency board but in accelerating structural reforms, and cooperation with international financial institutions and other international bodies," said Governor Softić, adding that the currency board is not an obstacle to faster and stronger accession to the EU.

"The path to EU membership is long. However, candidate status is certainly a strong motivation to accelerate necessary reforms and improve the standard of living of the population. Economic growth is possible only with significant investments, private and public, domestic and foreign, for the attraction of which it is necessary to create a favorable environment," concluded the governor.

Head of the Delegation of the European Union to BiH and EU Special Representative in BiH H.E. Johann Sattler pointed out in his opening address the need for greater investments in BiH, which, above all, require a favorable environment, the rule of law, and then political stability. The participants of the conference were also greeted by the British Ambassador to BiH H.E. Julian Reilly, who also pointed out the necessity of implementing socio-economic reforms in BiH and emphasized that Bosnia and Herzegovina has great economic potential that needs to be utilized, while the UNDP Resident Representative in BiH H.E. Steliana Nedera highlighted that UNDP advocates for policies that include investment, security, and innovation.

The conference participants were also addressed by the director of Color Media Communications, Robert Čoban, who pointed out the importance of today's conference and the discussions between representatives of the international community and domestic officials and experts for future cooperation.

The conference brought together leading economic experts, businessmen, and holders of the highest public offices, as well as representatives of the diplomatic community in BiH, with the aim of analyzing the economic environment, investment climate, implementation of reforms and legislation, as well as measures that BiH should take through constructive dialogue among all participants.

The institutional partner of the conference was the Central Bank of Bosnia and Herzegovina, supported by the British Embassy in Bosnia and Herzegovina and the EU Delegation in Bosnia and Herzegovina, as well as partners: UNDP, Mastercard, Kakanj Cement HeidelbergCement Group, Sparkasse banka, Adriatic Metals, ASA Banka, Violeta company; Courtyard by Marriott.