Economic Background

Economic Background

Bosnia and Herzegovina has a stabile macroeconomic climate in South-East Europe, characterized by sustained stable currency and low inflation.

Mining and mining-related activities make up the bulk of Bosnia and Herzegovina's industry. Mining is important, and there are significant deposits of lignite, iron ore, bauxite, copper, lead, zinc, manganese, and other minerals.

Steel production, vehicle assembly, textiles, tobacco products, wooden furniture and domestic appliances are also important industries. Industrial capacity, largely damaged or shut down in 1995 because of the war, has increased. In 1998, industrial production grew an estimated 35%. Nevertheless, this figure remains lower than the pre-1992 rate, and in 2001, output stood only about half its prewar level.

Never particularly robust, Bosnia and Herzegovina's economy was shattered by the war that broke out after independence. Wheat, corn, oats and barley are the principal agricultural products of Bosnia and tobacco, cotton, fruits, and grapes of Herzegovina. Livestock is also raised.

Vehicle and aircraft assembly, oil refining, and the manufacture of steel, textiles, tobacco products, wooden furniture, and domestic appliances are important. There has been some development of the country's hydroelectric power resources and expectations for development of this sector are very high. Metals, clothing and wood products are exported, and machinery, chemicals, fuels and foodstuffs are imported.

 Source: Agency for Statistics of B&H, Central Bank of B&H

FDI Position and Performance

According to the preliminary FIPA estimation for the first half-year of 2011, slight increase of FDI was recorded (1.4%), compared to the same period last year. This is a postive sign for future FDI growth rate, especially if we take into account that certain forein investors announced their investment plans in the coming period.

Total amount of FDI in Bosnia and Herzegovina at the end of 2010 was 4.9 billion €.

Note: Foreign Direct Investments (flows and stocks) are compiled in accordance with the most recent methodological standards and instructions of the International Monetary Fund (IMF) and Organization for Economic Cooperation and Development (OECD).
According to above listed methodological changes data series are revised for the period 2004-2009. Source: Central Bank of BiH

In 2007 we attracted 1.3 billion € which is absolutely the highest amount recorded in the last 15 years mainly thanks to the privatization of certain large state-owned enterprises. In 2008 FDI inflow was 683 mill €, without the expected privatization, can be considered as satisfied, especially if we take into account its positive structure (investment in production sector and high contribution of Greenfield investments). In 2009 and 2010 the global economic crisis hit the inflow of FDI.


Flow of FDI in Bosnia and Herzegovina, by years, million €

Source: Central Bank of BiH 2004 - 2010, FIPA estimation 2000 - 2004

Note: Values present Net inflow of foreign direct investment in BiH, including inflow and outflow of assets and liabilities of FDI in BiH


Foreign Investment in Bosnia and Herzegovina
January – December 2010

Source: Central Bank of BiH

During the previous period the European countries have invested more than 90% of total FDI in Bosnia and Herzegovina. Overall, the biggest country investor in BiH is Austria. 


FDI Stocks by Country, million €

Source: Central Bank of BiH

Top investor countries in BiH
May 1994 - December 2010
Total amount 4.9 billion €
                                                                                                                              
Source: Central Bank of BiH

Due to the good reputation and long industrial tradition of BiH, the manufacturing sector received the most amount of FDI. The biggest share of investment has been in the production sector (34%) and banking sector (22%).


FDI Stocks by Industry,
May 1994 - December 2010

Source: Central Bank of BiH; MoFTER; FIPA

Success stories of foreign investors confirm that Bosnia and Herzegovina is relevant destination for foreign investment, and that we can be optimistic concerning the FDI inflows in coming period.

Our expectation that in the coming years the FDI levels in BiH will increase, are based on our investment opportunities, availability of natural resources and intention to privatize other strategic companies.

Taken over from official website of B&H Foreign Investment Promotion Agency:

http://www.fipa.gov.ba/local_v2/default.asp#