Economy of Bosnia and Herzegovina

Next to Former Yugoslav Republic of Macedonia (F.Y.R.O.M.), 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 republic. The centrally planned economy has resulted in some legacies in the economy. Industry is greatly overstaffed, reflecting the rigidity of the planned economy. Under Josip Broz 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, causing unemployment to soar and production to plummet by 80%, as well as causing the death of about 200,000 people and displacing half of the population. With an uneasy peace in place, output recovered in 1996-98 at high percentage rates on a low base; but output growth slowed appreciably in 1999, and GDP remains far below the 1990 level. Economic data are of limited use because, although both entities issue figures, national-level statistics are not available. Moreover, official data do not capture the large share of activity that occurs on the black market. In 1999, the convertible mark - the national currency introduced in 1998 - gained wider acceptance, and the Central Bank of Bosnia and Herzegovina dramatically increased its reserve holdings. Implementation of privatization, however, faltered in both areas. Banking reform is also lagging. The country receives substantial amounts of reconstruction assistance and humanitarian aid from the international community but will have to prepare for an era of declining assistance. However, considerable progress has been made since peace was reestablished in the republic. Due to Bosnia's strict currency board regime, inflation has remained low in the Federation and RS. However, growth has been uneven up until this point, with the Federation outpacing the RS; this is due to the disparity in economic assistance to the Federation as opposed to the RS.

Bosnia's most immediate task remains economic revitalization to create jobs and income. In order to do this fully, the environment must be conducive to a private sector, market-led economy. Bosnia faces a dual challenge: not only must the nation recover from the war, but it also must make the transition from socialism to capitalism.

According to World Bank estimates, GDP growth was 62% in the Federation and 25% in the RS in 1996, 35% in the Federation and flat in the RS in 1997, and continued growth in the Federation in 1998. Growth in the RS should see dramatic increases following recent upsurges in donor investment. Support for Eastern European Democracy (SEED) assistance accounts for 20%-25% of economic growth in Bosnia.

This kind of economic growth would not have been possible without both international assistance and the establishment of economic institutions and reforms. Movement has been slow, but progress has been made in economic reform. A Central Bank was established in late 1997, successful debt negotiations were held with the London Club in December 1997 and with the Paris Club in October 1998, and a new currency was introduced in mid-1998.

GDP: purchasing power parity - $6.2 billion (1999 est.)

GDP - real growth rate: 5% (1999 est.)

GDP - per capita: purchasing power parity - $1,770 (1999 est.)

GDP - composition by sector:
agriculture: 19%
industry: 23%
services: 58% (1996 est.)

Population below poverty line: NA%

Household income or consumption by percentage share:
lowest 10%: NA%
highest 10%: NA%

Inflation rate (consumer prices): 5% (1997 est.)

Labor force: 1.026 million

Labor force - by occupation: agriculture NA%, industry NA%, services NA%

Unemployment rate: 35%-40% (1999 est.)

Budget:
revenues: $NA
expenditures: $1.6 billion, including capital expenditures of $NA (2000 est.)

Industries: steel, coal, iron ore, lead, zinc, manganese, bauxite, vehicle assembly, textiles, tobacco products, wooden furniture, tank and aircraft assembly, domestic appliances, oil refining (much of capacity damaged or shut down) (1995)

Industrial production growth rate: 5%-10% (1999 est.)

Electricity - production: 2.22 billion kWh (1998)

Electricity - production by source:
fossil fuel: 32.43%
hydro: 67.57%
nuclear: 0%
other: 0% (1998)

Electricity - consumption: 2.065 billion kWh (1998)

Electricity - exports: 0 kWh (1998)

Electricity - imports: 0 kWh (1998)

Agriculture - products: wheat, corn, fruits, vegetables; livestock

Exports: $450 million (1997 est.)

Exports - commodities: NA

Exports - partners: NA

Imports: $2.95 billion (1997 est.)

Imports - commodities: NA

Imports - partners: NA

Debt - external: $4.1 billion (1997 est.)

Economic aid - recipient: $1.2 billion (1997 pledged)

Currency: 1 convertible marka (KM) = 100 convertible pfenniga

Exchange rates: convertible marks per US$1 - 1.9 (1999)

Fiscal year: calendar year

See also : Bosnia and Herzegovina