Page 68 - SE Outlook Regions 2024

quarter, while core inflation continues to remain above the target.”
4.2 Inflation & Monetary Policy - Bosnia & Herzegovina
Bosnia’s inflation remained high in 2023 although decreasing from the 12.2% hike the previous year. The European Commission expects that end-year consumer price inflation will reach 6.5% in 2023, while the International Monetary Fund (IMF) has projected it to fall even further – to 5.5%.
Inflation hit 17.4% in October 2022 and has since been on a declining trend but remains high. The IMF expects it to fall to 6% in 2023, but noted that downside risks are high and include a possible abrupt slowdown in Europe, an intensification of domestic political tensions, and the materialisation of financial risks.
It advised Bosnia to restrain the fiscal expansion to help contain inflationary pressures given limited monetary policy tools, and ease financing pressures. To achieve that, Bosnia should reduce current spending, including by containing the public wage bill, improve targeting of social spending, boost public investment, and improve revenue collection.
In 2024, the consumer price index (CPI) is expected to slow down growth to 3%, according to the IMF. The World Bank expects the CPI to rise by just 2.5% in 2024 and 1% in 2025.
Bosnia’s Directorate of Economic Planning (DEP) has noted that the forecast for 2024-2026 is based on the prices of foods and energy on global markets and the EU. It expects that in 2024-2026 the inflation in the country will cool down to 3.1% in 2024, 2.2% in 2025 and 1.9% in 2026.
The main risks to these forecasts are both international and local. Prices of energy and food on international markets could significantly affect those in Bosnia. Domestically, utilities costs could affect inflation.
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