Wednesday, July 28, 2010

Bosnia and Herzegovina economy

Next to Macedonia, Bosnia and Herzegovina 
was the poorest republic in the old Yugoslav Federation. For the most part, agriculture has been in private hands, but farms have been small and inefficient, and food has traditionally been a net import for the country. Industry still is greatly overstaffed, reflecting the legacy of the centrally-planned economy. Under Tito, military industries were pushed in the republic; Bosnia hosted a large share of Yugoslavia's defense plants. Three years of interethnic strife destroyed the economy and infrastructure in Bosnia, caused the death of about 200,000 people, and displaced half of the population.

Considerable progress has been made since peace was reestablished. Due to Bosnia and Herzegovina's strict currency board regime, which links the Konvertibilna Marka (BAM) to the Euro, inflation has remained low. However, growth has been uneven, with the Republika Srpska outpacing the Federation for the first time since Dayton. Bosnia and Herzegovina's most immediate task remains economic revitalization. In order to do this fully, the environment must be conducive to a private sector, market-led economy. Privatization has been slow, and unemployment remains high. The introduction of a value-added tax (VAT) in 2006 has increased the government's tax revenues and resulted in a budget surplus.

BiH's top economic priorities are: acceleration of EU integration by concluding a Stabilization and Association Agreement (SAA); strengthening the fiscal system; public administration reform; World Trade Organization (WTO) membership; and securing economic growth by fostering a dynamic, competitive private sector. To date, work on these priorities has been inconsistent. The country has received a substantial amount of foreign assistance but must prepare for declining assistance flows in the future.

GDP (2006 IMF est., purchasing power parity): $33.75 billion. Nominal GDP (Central Bank and IMF figures): $11.51 billion. If non-observed economy is included, nominal GDP is estimated by the Central Bank to be $13.4 billion.
GDP real growth rate (2006 World Bank est.): 6.2%.
Income per capita (2006 IMF est., purchasing power parity): $8,370. Nominal GDP per capita: $2,995, or, including the estimated gray economy, $3,487.
Inflation rate (2006 est.): 7.4%. (This is a one-time effect of the introduction of a value-added tax.)
Natural resources: Hydropower, coal, iron ore, bauxite, manganese, forests, copper, chromium, lead, zinc, cobalt, nickel, clay, gypsum, salt, sand, forests.
Agriculture: Products--wheat, corn, fruits, vegetables, livestock.
Industry: Steel, aluminum, minerals, vehicle assembly, textiles, tobacco products, wooden furniture, explosives, munitions, aircraft repair, domestic appliances, oil refining.
Trade (2006 Central Bank figure): Exports--$2.5 billion f.o.b.

Source:Bosnia and Herzegovina