BiH exports to the EU decreased by 465 million marks

19.07.2024. / 13:04

• • • The export of Bosnia and Herzegovina depends on only a few groups of products

    • The agricultural and food sector of BiH has the potential for greater exports

    • Trivić: We lost on competitiveness

BANJALUKA – In the exchange of goods with the European Union, the most important foreign trade partner of Bosnia and Herzegovina, in the first six months of this year, there are noticeable negative trends for the domestic economy. Exports fell by as much as 465 million KM, while imports increased by 566 million KM.

According to the data of the Foreign Trade Chamber (STK), in the first half of 2024, BiH achieved a total exchange volume of 15.8 billion KM with the European Union.

The volume is higher compared to the same period of the previous year due to the increase in imports.

Goods imported from the EU to BiH totaled 9.8 billion KM, which is 566.1 million KM or six percent more. At the same time, exports decreased by 465.1 million KM or seven percent, so the total value exported to the EU was 6.1 billion KM.

Such changes in trade have resulted in the coverage of imports by exports of 62 percent and a deficit in trade of 3.7 billion KM.

“BiH’s exports to the EU have almost the same trend as the countries of the region, which is expected. The drop in exports is most noticeable in the energy sector, due to the drop in electricity exports, then due to the drop in exports of iron and steel and their products and the drop in exports in the TOKO (textiles, clothing, leather and footwear) industry, which is the result of a decrease in consumption and a decrease in orders from abroad “they pointed out in the Foreign Trade Chamber.

The export of furniture, which participates in the surplus in the wood sector, has also decreased, as a consequence of the decrease in demand, which is again, they add, a reflection of the German economy.

On the other hand, the agro and food sector, the automotive and electrical industry are significantly participating in the recovery of imports.

“The data once again confirm our dependence on the EU market, because the recovery of that economy has a visible reflection on the industries in BiH, especially the automotive and electrical industries.”say STK and add that Bosnia and Herzegovina exports over 70 percent of its products to the EU market.

Economic analyst Igor Gavran says that these results are bad for at least three reasons. The first, he says, is that complete dependence on the EU market continues, which dominates both exports and imports, and any disruption in Bosnia and Herzegovina has negative effects.

“If we were to strengthen cooperation with other markets, it would be much easier to deal with cases such as the current falling demand for our export products in the EU. The second reason is internal, because there was a big drop in electricity production, primarily due to the inability of Elektroprivreda BiH to effectively manage mines within the concern, and also a drop in steel production.”Gavran points out.

The third reason, he adds, is that the export structure of Bosnia and Herzegovina is very limited and practically depends on only a few groups of products, and any disruption in their export dramatically reduces total values ​​and quantities.

“On the other hand, the import structure is again tragic in another sense, which is that we import practically everything, including a huge number of products that we either produce or can produce ourselves. If we think about future trends, unfortunately we cannot be optimistic because we see neither strategic nor individual measures that would indicate improvements”emphasized Gavran.

The owner of “Krajina Klasa” and exporter Saša Trivić says that BiH, that is, the RS has a decline in exports, while Serbia does not, and that there is no rumor that this is solely related to the circumstances of the EU.

“South America and Africa have increased exports to Europe, which means that we have gained competition on the European market, and our wages have increased and we have lost competitiveness”says Trivić.

Where are the potentials of BiH?

In the foreign trade chamber for CAPITAL they say that, looking at the sectoral exchange of goods, BiH has large amounts of imports in the agro and food sector, and that at the same time there would be an opportunity to export products from the agro and food sector with the products that BiH owns, which have a low coverage of imports and exports.

“Water as a natural resource is a potential for export, and at the same time it would also recover the commodity exchange of BiH, in which we record a large deficit caused by the import of foreign water”they say in STK.

They add that the dairy sector with its processing industry is also a potential.

“Exports to the EU already exist, but could be improved. Currently, we export most to Croatia, and there is room for other EU members as well.”they point out in STK.

Beer, as a product with a low coverage of import and export, can be an export product to the EU, given that domestic consumption in BiH is under the influence of imported beer, and therefore there are reserves for export as well.

Also, the meat industry has the opportunity to create exports, as agreed jobs export for the sake of import (we import raw materials for processing), so the meat processing industry has the potential to improve exports.

“BiH has a license to export chicken meat to the EU, and we also have the potential for export, so this industry is an opportunity for our exporters.”say STK and point out that the furniture industry also has the capacity for export.

“Although the export of finished furniture to the EU is prominent, BiH has an opportunity for additional export values”they add.

The metal and specialized industry is certainly on the EU market, but it has the potential for additional exports, as does the textile, clothing, leather and footwear industry.

Stoppages at the GP and limited stay of drivers in the EU are key problems

When it comes to problems with exporting to the EU, STK points out that two key problems that could significantly destabilize BiH’s export activities are delays at border crossings, the status of which must be redefined with Croatia, as well as the restriction of the stay of professional drivers on EU territory.

“It is clear that due to its geographical position BiH has to rely on land transport, where road traffic has the largest share, and if there are open issues like the ones mentioned, BiH’s exports can experience great turbulence. The question here is why do we produce if we are not able to transport the goods?”they said.

The current challenge for companies from BiH is certainly compliance with ESG standards, the implementation of which is necessary by EU companies, as our customers. This is one of the demands of our companies that is inevitable, given that more than 70 percent of annual exports are exports to the EU.

“According to our knowledge, from the companies that already use the ESG principle, it has been shown that the adoption of the standard increases the reputation, and new processes and products are launched. Exporters who do not operate according to the ESG principle, i.e. do not meet the requirements, will probably find themselves in a problem because they will not be able to export”STK emphasized.

They also say that the data shows that we sell more of some products in Croatia than in Bosnia and Herzegovina, which means that our producers should strive to open representative offices or companies in the EU in order to personally work on sales and minimize sales through distributors.

CAPITAL: Marina Ljubojević