Overview
The International Monetary Fund has revised down its projection for Bosnia and Herzegovina's economic expansion in 2026 to 2%, attributing the adjustment to economic pressures stemming from the war in the Middle East. The IMF's mission chief for Bosnia and Herzegovina, David Amaglobeli, identified higher energy import costs and weaker demand in the European Union - the country’s primary trading partner - as the key factors constraining growth.
Recent performance and near-term outlook
According to the IMF's assessment, Bosnia's economy expanded by 2.1% last year and registered stronger growth of 3.2% in 2024. Despite that recent momentum, the fund expects the country to slow to 2% growth in 2026 as external headwinds sap activity. The same pressures that are expected to hold back output are also forecast to push inflation higher; the IMF projects inflation will increase to 5.4% this year.
Medium-term trajectory
Looking beyond 2026, the IMF envisions a gradual recovery. The fund's projections indicate growth should pick up to 2.7% in 2027 and then reach about 3% from 2028 onward. Even with that projected catch-up, Amaglobeli cautioned that those growth rates would be insufficient to close the gap with the European Union for many years.
Implications
The IMF assessment links Bosnia’s near-term slowdown and higher inflation directly to two observable factors: increased energy import costs and diminished demand from the EU. These elements are presented as the primary channels through which the Middle East conflict is influencing Bosnia’s macroeconomic picture. The fund’s medium-term forecasts assume gradual improvement but do not alter the view that convergence with EU income levels remains distant under the projected growth path.
Conclusion
The IMF’s revised numbers frame a period of constrained expansion for Bosnia and Herzegovina, driven largely by external developments. Inflation is expected to rise in the near term, while growth should recover slowly over the coming years to levels that, according to the fund, will still leave Bosnia trailing the European Union by a significant margin for an extended period.