The International Monetary Fund expects Bosnia and Herzegovina’s economy to grow 2.4% in 2025 and 3% in 2026, driven by consumption and exports but with elevated downside risks, it said in a staff report on Friday.
“Trade uncertainty, a slowdown in Europe, volatile commodity prices, tighter global financial conditions and further escalation of political tensions pose significant downside risks to growth,” the IMF Executive Board said after completing an Article IV consultation for the Balkan country.
Bosnia’s economy grew 2.5% last year.
The IMF underscored the importance of Bosnia maintaining political stability, avoiding policy slippages and leveraging the EU accession process to accelerate reforms.
Bosnia’s reform process has been blocked over the past year due to a political crisis triggered by the Bosnian Serb separatist drive, widely seen as one of the biggest threats to peace in the Balkans since the 1995 Dayton peace accords that ended the fighting in Bosnia.
Inflation is seen at 3.8% in 2025 due to higher imported food prices, more than doubling from 1.7% in the previous year, the Washington-based lender said. It warned that strong growth in real wages and private sector credit could put upward pressure on inflation, which stood at 2.3% in May, the latest available data.
The current account deficit is expected to widen to 4.1% of GDP from 4% in 2024, with a recovery in electricity exports after last year’s droughts and lower oil prices offsetting adverse effects of U.S. tariffs on exports.
IMF directors highlighted the importance of safeguarding central bank independence and further strengthening the bank’s policy toolkit to preserve the credibility of the currency board arrangement, which remains an anchor of stability.