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 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.

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.