In-depth country-focused analysis on Bosnia-Herzegovina's economic, political and operational risk environment, complemented by detailed sector insight


Our comprehensive assessment of Bosnia-Herzegovina's operating environment and the outlook for its leading sectors are formed by bringing together a wealth of data on global markets that affect Bosnia-Herzegovina, as well as the latest industry developments that could impact Bosnia-Herzegovina's industries. This unique integrated approach has given us an impeccable track-record for predicting important shifts in the markets, ensuring you’re aware of the latest market opportunities and risks in Bosnia-Herzegovina before your competitors.

Country Risk

Bosnia-Herzegovina Country Risk

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Core Views

  • Partisan manoeuvring, ethnic divisions, and complex governing structures combine to make Bosnia-Herzegovina's political system largely dysfunctional. With few signs that radical improvements are forthcoming in even after the country's EU membership application, we expect the coming years to be tainted by frustrating delays to badly-needed reforms.

  • After outperforming in 2015, the economic recovery is set to continue 2016 and beyond, driven largely by renewed growth in household consumption and to a lesser extent fixed investment. Chronic unemployment and an under-developed infrastructure will remain impediments to even faster growth, while increased global risks also pose a threat to the recovery.

  • Budget policy will continue to be guided by the IMF due to the government's reliance on external funding to...

Bosnia-Herzegovina Operational Risk Coverage (9)

Bosnia-Herzegovina Operational Risk

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BMI View: Barriers to entry remain considerable for investors considering establishing a business in Bosnia-Herzegovina. The regulatory structure is fragmented and complex and investors face time consuming and costly processes to open or close a business in the country. In addition to these risks, the rule of law is considered weak and property rights are not effectively legislated or enforced. Businesses are also presented with a high tax burden and underdeveloped domestic financial market which limits access to capital and credit.

Bosnia is operating at a trade deficit due to low-value exports and relatively few natural resources or sophisticated industry, meaning that fuels and technologies have to be imported. Nevertheless, the country and investors are currently benefitting from numerous international free trade agreements. Bosnia also exhibits strong levels of foreign direct investment...

Bosnia-Herzegovina Crime & Security

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BMI View: Investors in Bosnia-Herzegovina do face considerable risks originating in the complex and frequently volatile domestic political environment and wider interstate relationships. The division of the country under the post war Dayton Agreement has given rise to a multitude of issues including a fragmented police force, limited regulatory cooperation and varying legislation. Businesses do, however, stand to benefit from the very low crime rate in the country, which reduces the need for additional security or insurance. Bosnia scores above the global average of 49.8 with a Crime And Security Risk Score of 59.2...

Bosnia-Herzegovina Labour Market

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BMI View: Investors in Bosnia-Herzegovina are presented with some considerable challenges in terms of the country's labour pool. The education system is outdated and not fit for purpose, resulting in a significant lack of skilled labour in the workforce - an issue exacerbated by the country's high level of emigration. Access to the labour pool is restricted by the low rate of urbanisation as well as the limited participation of women in the workforce and businesses will likely need to factor in the additional cost of bringing in foreign skilled labour. Compounding this is the relatively high minimum wage, low productivity and further labour taxes which serve to make Bosnia's workforce uncompetitive on a regional basis. Overall, the country...

Bosnia-Herzegovina Logistics

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BMI View: A historical lack of sufficient investment in the country's transport network has resulted in Bosnia-Herzegovina's road, rail and air transport connections being left unable to cope with increased demand. Much of the logistics network was damaged during the 1992-1995 Bosnian War and without significant improvement works businesses face potentially costly supply chain disruptions. Businesses do stand to benefit from competitive electricity and fuel costs, though we do note that Bosnia's reliance on imported fuel from Russia leaves the country highly vulnerable to interruptions to supply and escalating prices. As such, Bosnia has an overall score of 39.4 out of 100 on the BMI Logistics Risk Index. This places the country an uncompetitive...

Bosnia-Herzegovina Trade & Investment

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BMI View: Bosnia-Herzegovina's moderate level of economic openness with regard to foreign direct investment does little to relieve investors from the burden of a complicated and fragmented regulatory structure. The country's operating environment is characterised by a time-consuming, non-transparent process to open a business and the risk of double inspections and fees because of the overlapping jurisdictions of fragmented state and cantonal authorities. The most significant risk to investors is posed by the weak rule of law and meagre protection of property rights in Bosnia. In BMI ...

Bosnia-Herzegovina Industry Coverage (5)

Commercial Banking

Bosnia-Herzegovina Commercial Banking

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Commercial Banking Sector Indicators
Date Total assets Client loans Bond portfolio Other Liabilities and capital Capital Client deposits

Defence & Security

Bosnia-Herzegovina Defence & Security

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BMI View: We expect Bosnia's defence budget to increase in 2016 in absolute terms. This will be driven by the country's necessity to fulfil the defence requirements for NATO and the EU membership that the government appears to be readily willing to address. None of this budget, however, appears set to finance the development of the domestic defence sector, and as a result, few opportunities will open up in the near future.

Bosnia's domestic defence sector remains significantly under-developed. Budgetary constraints in the past few years have forced the government to reduce the number of troops and to dedicate the small share of defence budget...


Bosnia-Herzegovina Infrastructure

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BMI View: Post-election political instability and a lack of clear leadership, combined with the knock-on effects of devastation from the 2014 floods, has left Bosnia & Herzegovina's building industry faltering, despite the need for reconstruction and the aid coming in to support this. On the upside, the improving economy is likely to give a boost to both private and government consumption. We forecast the construction industry to grow by 5.5% in 2015 and 4.3% in 2016, with annual growth averaging 4.4% over 2015-2024.


Real Estate

Bosnia-Herzegovina Real Estate

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BMI View : Low demand and high vacancy rates characterise the Bosnian commercial real estate market. Occupier and investor activity is expected to remain subdued in the short term, but the long-term outlook is more positive. Given the sector's potential for growth and development we believe there will be greater interest from international and regional occupiers, developers and investors in the years ahead .

Economic growth is expected to accelerate to 2.8% in 2016 and 3.2% in 2017, reflecting recovery in consumer confidence and improved exports. Overall, GDP growth is forecast to average at 3.0% a year between 2016 and 2019.

In the office sector, stronger economic performance is likely to feed through to higher occupier demand and we expect market fundamentals to improve. Demand for space will be particularly driven...


Bosnia-Herzegovina Telecommunications

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BMI View: The government plans to sell a minority stake in BH Telecom, the largest of Bosnia's three incumbent operators. Poor financial performance is its key reason for selling, although there is little hope that an additional investor will be able to effect a change in strategy. The mobile and broadband markets offer few organic growth opportunities. The most attractive areas for investment are in services rather than infrastructure, although ongoing consolidation within the fragmented cable sector is welcomed.

Operators Must Monetise Mobile Broadband
Bosnia-Herzegovina Mobile Forecasts...

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