BiH's credit rating remains B+, with stable outlook

(Patria) - International rating agency Standard and Poor's (S&P) has maintained BiH's credit rating at 'B+' with a stable outlook, the Central Bank of BiH announced.

In its report for BiH, S&P analysts state that economic growth will increase by about 3% in real terms in the period from 2024-2027, thanks to increased consumption due to reduced inflationary pressures, several investment projects, and strengthening external demand.

Despite internal and external challenges, Bosnia and Herzegovina's economy showed resilience during 2023, with an estimated real GDP growth of around 2%, following an expansion of almost 4% in 2022.

The slowdown in economic growth is a consequence of weaker performance in Bosnia and Herzegovina's key trading partners, mainly from the European Union, and the impact of high inflation on private consumption.

A bright spot, according to analysts, is the strong tourism expansion of 15% in the first three quarters of 2023, which supported the country's economic growth.

From 2024, according to S&P analysts' assessment, Bosnia and Herzegovina will record economic growth supported by the economic recovery of key trading partners in the eurozone, which should stimulate export growth.

Inflation fell to 1.7% in November, and this is expected to affect real wage growth and private consumption.

Several major investment projects are also expected, particularly in the energy and road construction sectors, which will support growth over the next few years.

Bosnia and Herzegovina's net debt is around 20% of GDP, which is a moderate debt for developing countries, and analysts expect the current account deficit to remain at a low level for the next four years.

Bosnia and Herzegovina is also expected to maintain its currency board arrangement.

According to analysts, an increase in the credit rating could occur if consensus-based political decisions are reached, which could accelerate reforms and economic growth in the medium term.