This report covers the main macroeconomic releases from early till end-October as well as the financial and political events that took place in Bosnia during this period.
Bosnia has made only limited progress in addressing the political and economic criteria for EU membership, the European Commission said in its latest progress report. In October, the EC launched a procedure to reduce Bosnia's 2013 pre-accession financing by 54%, or by EUR 47mn, as the country's leaders missed another deadline to agree on a solution to the Sejdic-Finci case. The country slipped one place to rank 131th in the 2014 edition of the World Bank’s Doing Business report and remains the worst performer in the SEE region in terms of ease of doing business.

On the economic front, the IMF expects Bosnia's economy to grow by 0.5% in 2013 and by 2% in 2014, the fund said in its October 2013 WEO. The outlook is considerably less optimistic than the latest projection of the government's Directorate for Economic Planning (DEP) for 2.3% GDP expansion this year.

September’s consumer price index fell 0.5% y/y following a 0.2% year on year decline the month before on falling food, clothing and footwear and health costs. Bosnia's industrial production index increased 6.2% year on year in January-September on the back of higher manufacturing and electricity production. The unemployment rate edged up to 44.9% at end-August from 44.6% at end-July and 44.5% at end-2012, the country’s labour and employment agency said.

The foreign trade gap shrank 12.2% year on year to EUR 2.5bn (17.5% of GDP) in the first nine months of 2013 due to rising exports and declining imports.

The unconsolidated profit of Bosnia's banking sector rose 6% year on year to EUR 58mn in the first half of 2013. Commercial banks assets went up 3.7% year on year to EUR 11.7bn at end-September, following a 3.3% year on year growth a month earlier, underpinned by mild increase of lending activity and higher bank reserves. Bank deposits grew 6.0% to EUR 7.1bn at end-September, quickening from 5.4% at end-August, due both to stronger retail and corporate deposit collection. Bosnia’s central bank gross foreign reserves rose 9.7% year on year to EUR 3.5bn at end-September after increasing 9.6% year on year at end-August.