Bosnia and Herzegovina (BiH) faces real challenges, from political instability slowing reform momentum to rising prices and global uncertainty. While consumption continues to support growth in the short term, lasting progress will depend on stronger investment, quality jobs, and steady reforms, especially as the country moves toward EU integration. Staying focused and adaptable will be key to overcoming risks and building a more resilient future.

BiH’s GDP growth decelerated to 1.7% in Q1 2025, down from 3.0% a year earlier, driven by a slowdown in industrial production, in particular manufacturing. Consumption persisted, but weak investment and rising food prices pushed inflation up to 3.4% in June. With these challenges, growth is projected to remain moderate, reaching 3.2% by 2027.

Public debt remains modest. However, average real income growth of just 3% per year since 2015 has left per capita GDP at only one-third of the EU average in 2024, limiting progress in poverty reduction. Economic vulnerability persists, with 40% of adults reporting they could not cover expenses for more than a month if their main income was lost. An increase in the minimum wage has provided some relief to those with lower incomes.

Looking ahead, BiH faces key challenges: accelerating structural reforms, improving the business climate, and boosting labor market inclusion, especially for vulnerable groups.