Bosnia and Herzegovina

The citizens of Bosnia and Herzegovina (BiH) aspire to a future in the European Union with rising living standards, good-paying jobs, better infrastructure and public services, and a healthy, sustainable environment.

However, the country faces critical challenges in achieving those aspirations, including the rapid loss of its population through emigration.

The country cannot afford to continue losing valuable human capital this way. Creating the incentives for people to stay will require meeting their aspirations for a better quality of life for them and their families. This is achievable but will require decisive action by all stakeholders.

BiH’s current development path will not create the opportunities that its population needs. BiH has made significant progress in maintaining macroeconomic stability, posting fiscal surpluses and declining debt levels.

But this is not enough. While economic growth has been stable over the past several years around 3%, it is simply too low to underpin a path to shared prosperity. Should BiH continue to grow at the same rate, it would take over 100 years for the country to reach the living standards observed in the EU.

To achieve higher, more sustainable, and equitable growth, interventions will be needed along four pillars: (i) rebalancing of growth, (ii) investments in physical capital, (iii) stronger human capital, and (iv) natural resources management.

Bosnia and Herzegovina (BiH) faces important challenges, from political uncertainty slowing reform momentum to a complex external environment and persistent structural constraints. While domestic demand continues to support economic activity, lasting progress will depend on stronger investment, quality jobs, and steady reforms, particularly as the country advances toward EU integration. Strengthening private-sector-led growth and improving productivity will be key to building resilience and accelerating convergence with EU living standards.

Economic growth strengthened to 2.4% year on year in the second quarter of 2026, following growth of 2.3% in the first quarter. Manufacturing continued to weigh on overall economic activity, while strong growth in accommodation and food services provided support to the economy.

Public debt remains relatively low, although evolving financing needs highlight the importance of prudent debt management. However, income convergence with the EU remains slow, reflecting long-standing structural weaknesses and modest productivity growth. A consumption-led growth model, supported by remittances and a large public sector, has helped preserve macroeconomic stability but has not generated sufficient gains in investment, exports, productivity, or quality jobs. Economic vulnerability also remains high, with 40% of adults reporting that they could not cover expenses for more than a month if they lost their main source of income.

Looking ahead, BiH's key challenge is to translate macroeconomic stability into faster and more inclusive growth. Accelerating structural reforms, improving the business environment, and increasing labor market participation, especially among women, youth, and other underrepresented groups, will be essential to boosting investment, raising productivity, and creating better economic opportunities.

The Country Partnership Framework (CPF) for 2022-2026 supports Bosnia and Herzegovina’s sustained recovery from the impacts of the COVID-19 pandemic, as well as reforms to support job creation and a greener, more inclusive economy. The strategic framework builds on 30 years of strong partnership between Bosnia and Herzegovina and the World Bank Group.

The volatile regional and global environment calls for reforms and institutional changes that will make Bosnia and Herzegovina’s economy more resilient to internal and external shocks. Through this framework, the World Bank Group will support reforms in three broad areas: (1) increased inclusive private sector employment; (2) improved sustainable service delivery; and (3) supporting the country with improving its resilience to climate change.

The framework includes a cross-cutting theme of gender, which is aimed at addressing structural barriers that limit economic opportunities for women and other vulnerable groups to support a stronger, more resilient recovery.

Through the CPF, the World Bank is providing analysis, advice and financing for implementation of reform programs designed to restore economic growth and job creation. During the CPF period, Bosnia and Herzegovina will have access to $750 million of new lending from the World Bank, depending on the country’s demand and progress in reform implementation.