16.09.2024. / 9:46
SARAJEVO – Increased consumption, which should be supported by lower inflation and growth in real wages, will increase real growth in Bosnia and Herzegovina to 2.8 percent this year.
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This is stated, among other things, in the report of the international rating agencies “Moody’s” and “Standard and Poor’s” (S&P), which confirmed the credit rating of BiH with a stable outlook.
These agencies also confirmed the credit ratings of the Republic of Srpska and the Federation of BiH.
“Moody’s” analysts stated that they confirm the credit rating of BiH with B3 with a stable outlook.
“The very high political instability of BiH continues to hinder the implementation of reforms and reflects institutional weakness. Real GDP is expected to grow to three percent in 2025. The reforms could help unlock access to new pre-accession financing that can support greater investment. However, the economy faces significant negative risks from the upcoming implementation of the European Union Carbon Limit Adjustment Mechanism (EU CBAM), which will negatively affect a large part of BiH’s exports in the absence of significant decarbonization reforms.it is written in the “Moody’s” report.
They pointed out that the debt of the general government will remain moderate even in case of increased social spending.
According to Moody’s, the credit ratings of Republika Srpska and the Federation of Bosnia and Herzegovina are B3 with a stable outlook.
S&P announced that BiH’s credit rating is B+ with a stable outlook.
“Despite the internal and external influences of BiH. the economy showed resilience in the first half of 2024. We expect that increased consumption, supported by lower inflation and growth in real wages, will raise real growth in BiH to 2.8 percent this year. From 2025, there will be somewhat stronger investment, especially in the field of energy and road construction, and an increase in external demand, due to the economic recovery of key trade partners in the eurozone, which will bring a result of real growth of almost three percent in the period 2025-2027. year”added in the announcement of “Standard and Poor’s”.
Doctor of economic diplomacy Siniša Pepić believes that the confirmation of the credit rating of BiH, as well as Republika Srpska and FBiH, by the renowned rating agencies “Moody’s” and “Standard & Poor’s” carries with it important economic implications, despite the challenges the country is facing.
“Maintaining a stable rating at the level of B3 (Moody’s) and B+ (S&P) indicates a certain level of confidence of international analysts in the country’s economic ability to withstand current financial pressures, but also the recognition of continuous political risks that hinder more dynamic development. High domestic consumption, fueled by lower inflation and growth in real wages, is certainly one of the key factors that enables more optimistic economic growth.”explained Pepić and added:
“However, we have to be careful when interpreting these numbers because there is still fragility in the fundamentals of the economy, especially when we take into account political instability that can quickly reverse positive trends. On the other hand, it should be recognized that stability in credit ratings sends a good message to potential investors. It shows that BiH, despite internal challenges, has a certain capacity for growth and development. If we focus on constructive reforms and efficient use of resources, the real economic potential of the country could be used in an even better way. All this could further stabilize financial indicators and, crucially, improve long-term prospects. Of course, in order for this growth to be sustainable, it is necessary to simultaneously work on reducing political tensions and increasing institutional stability.”.Independent
Source: www.capital.ba
