Bosnia and Herzegovina Economy 2007

Economy - overview:
Bosnia and Herzegovina ranked next to Macedonia as the poorest republic in the old Yugoslav federation. Although agriculture is almost all in private hands, farms are small and inefficient, and the republic traditionally is a net importer of food. The private sector is growing and foreign investment is slowly increasing, but government spending, at nearly 40% of adjusted GDP, remains unreasonably high. The interethnic warfare in Bosnia caused production to plummet by 80% from 1992 to 1995 and unemployment to soar. With an uneasy peace in place, output recovered in 1996-99 at high percentage rates from a low base; but output growth slowed in 2000-02. Part of the lag in output was made up in 2003-06 when GDP growth exceeded 5% per year. National-level statistics are limited and do not capture the large share of black market activity. The konvertibilna marka (convertible mark or BAM)- the national currency introduced in 1998 - is pegged to the euro, and confidence in the currency and the banking sector has increased. Implementing privatization, however, has been slow, particularly in the Federation, although it is increasing in the Republika Srpska. Banking reform accelerated in 2001 as all the Communist-era payments bureaus were shut down; foreign banks, primarily from Western Europe, now control most of the banking sector. A sizeable current account deficit and high unemployment rate remain the two most serious economic problems. On 1 January 2006 a new value-added tax (VAT) went into effect. The VAT has been successful in capturing much of the gray market economy and has developed into a significant and predictable source of revenues for all layers of government. The question of how to allocate revenue from VAT receipts is not completely resolved. Bosnia and Herzegovina became a member of the Central European Free Trade Agreement in December 2006. The country receives substantial reconstruction assistance and humanitarian aid from the international community but will have to prepare for an era of declining assistance.

GDP (purchasing power parity):
$25.32 billion
note: Bosnia has a large informal sector that could also be as much as 50% of official GDP (2006 est.)

GDP (official exchange rate):
$9.234 billion (2006 est.)

GDP - real growth rate:
6.2% (2006 est.)

GDP - per capita (PPP):
$5,600 (2006 est.)

GDP - composition by sector:
agriculture: 10.2%
industry: 23.9%
services: 66% (2006 est.)

Labor force:
1.026 million (2001)

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

Unemployment rate:
45.5% official rate; grey economy may reduce actual unemployment to 25-30% (31 December 2004 est.)

Population below poverty line:
25% (2004 est.)

Household income or consumption by percentage share:
lowest 10%: NA%
highest 10%: NA% (2001)

Distribution of family income - Gini index:
26.2 (2001)

Inflation rate (consumer prices):
7.5% (2006 est.)

Budget:
revenues: $6.207 billion
expenditures: $5.838 billion (2006 est.)

Public debt:
23.4% of GDP (2006 est.)

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

Industries:
steel, coal, iron ore, lead, zinc, manganese, bauxite, vehicle assembly, textiles, tobacco products, wooden furniture, tank and aircraft assembly, domestic appliances, oil refining

Industrial production growth rate:
5.5% (2003 est.)

Electricity - production:
12.22 billion kWh (2005)

Electricity - consumption:
8.574 billion kWh (2005)

Electricity - exports:
3.58 billion kWh (2005)

Electricity - imports:
2.174 billion kWh (2005)

Oil - production:
0 bbl/day (2004)

Oil - consumption:
23,000 bbl/day (2004 est.)

Oil - exports:
NA bbl/day

Oil - imports:
NA bbl/day

Oil - proved reserves:
0 bbl (1 January 2006)

Natural gas - production:
0 cu m (2005 est.)

Natural gas - consumption:
383.6 million cu m (2005 est.)

Natural gas - exports:
0 cu m (2005 est.)

Natural gas - imports:
383.6 million cu m (2005)

Current account balance:
$-1.261 billion (2006 est.)

Exports:
$3.382 billion f.o.b. (2006 est.)

Exports - commodities:
metals, clothing, wood products

Exports - partners:
Croatia 19.6%, Slovenia 16.7%, Italy 15.4%, Germany 12.3%, Austria 8.7%, Hungary 5.3% (2006)

Imports:
$7.618 billion f.o.b. (2006 est.)

Imports - commodities:
machinery and equipment, chemicals, fuels, foodstuffs

Imports - partners:
Croatia 24%, Germany 14.5%, Slovenia 13.2%, Italy 10%, Austria 5.9%, Hungary 5.2% (2006)

Economic aid - recipient:
$546.1 million (2005 est.)

Reserves of foreign exchange and gold:
$3.372 billion (2006 est.)

Debt - external:
$6.51 billion (2006 est.)

Market value of publicly traded shares:
$NA

Currency (code):
konvertibilna marka (convertible mark) (BAM)

Exchange rates:
konvertibilna maraka per US dollar - 1.5576 (2006), 1.5727 (2005), 1.5752 (2004), 1.7329 (2003), 2.0782 (2002)
note: the convertible mark is pegged to the euro