Central Bank expects continuation of economic activity recovery compared to spring 2020

SARAJEVO, (Patria) - The Central Bank of Bosnia and Herzegovina (CBBH) has enriched its diagnostic tools with a model for rapid assessments of key macroeconomic variables. Starting from the first quarter of 2021, CBBH plans to publish quarterly assessments of current economic activity, primarily the dynamics of real GDP and inflation in BiH. Currently, CBBH estimates that real GDP, on an annual level, was lower by 3.77% in the fourth quarter of 2020, while the decline in the first quarter of 2021 amounts to 3.23%.

A continuation of the deflationary period is expected during the first quarter of 2021 as well, with an estimated average annual inflation of -1.31%.

CBBH uses a set of available monthly indicators, which have proven to be good predictors of economic activity trends in the relatively recent past, to assess the intensity of economic activity up to the current quarter.
According to projections, positive annual economic activity growth rates are not expected until the end of the first quarter of 2021. Nevertheless, there are noticeable signs of a continued recovery trend after the dramatic drop in activity in the second quarter of 2020.

Unlike the model for medium-term projections, which CBBH publishes twice a year for the current and the next two years, the model for rapid short-term assessments of current economic activity is primarily used to assess the dynamics of real GDP and inflation in the current or previous quarter.

Official data on quarterly GDP, published by national statistical agencies in BiH and other countries, are usually available with a significant time lag. The delay in publishing official data after the end of the quarter makes it difficult to assess the state of the economy and develop medium-term and long-term projections.

Consequently, planning and assessing the effects of economic policies in the country can be subject to numerous revisions. CBBH uses rapid short-term assessments of key macroeconomic variables until the publication of official statistical data, or a new round of short-term projections.