SARAJEVO: Bosnia's economy is probably heading into recession, given falling exports and industrial output in the first half of the year, Central Bank governor Kemal Kozaric said in comments published by a Sarajevo newspaper on Friday.
"I cannot officially say that we are in recession because we must wait for the third quarter to pass," Kozaric told the daily Oslobodjenje. "If negative current trends continue, Bosnia will be in recession after September."
The central bank had originally forecast 1.5 percent economic growth in Bosnia this year, but Kozaric said industrial output had fallen 6.7 percent in the first half of the year, exports were down 5.1 percent and imports 0.7 percent.
The trend has left the Balkan country with a foreign trade gap of 3.4 billion Bosnian marka ($2.1 billion).
The International Monetary Fund has cut its growth forecast for the country to zero from 0.7 percent, citing alarming economic data and the impact of the crisis in the euro zone, the Balkan region's main source of trade and investment.
The Fund warned in July that even that forecast might be optimistic. Kozaric said foreign currency reserves at the central bank fell 400 million marka to 5.9 million marka in June.
He also warned of the economic damage wrought by drought and forest fires, including a deficit in food trade of 2 billion marka.
The bank governor said he expected the IMF board to approve a new $500 million standby loan deal for Bosnia in September, "to calm the fire so the governments can finish the year without major problems".
Bosnia's two regions, the Serb Republic and the Federation dominated by Bosniaks (Bosnian Muslims) and Croats, are both running high budget deficits and urgently need an IMF cash injection.
A loan agreement was reached with the IMF at staff level in July. Rivalry between the two regions, linked since Bosnia's 1992-95 war via a weak central government, has led to a protracted political crisis that has slammed the brakes on reform, investment and progress towards mainstream Europe.
"We have to implement certain reforms, and the condition of all conditions is political stability, which we don't have," Kozaric said.
indiatimes.com
"I cannot officially say that we are in recession because we must wait for the third quarter to pass," Kozaric told the daily Oslobodjenje. "If negative current trends continue, Bosnia will be in recession after September."
The central bank had originally forecast 1.5 percent economic growth in Bosnia this year, but Kozaric said industrial output had fallen 6.7 percent in the first half of the year, exports were down 5.1 percent and imports 0.7 percent.
The trend has left the Balkan country with a foreign trade gap of 3.4 billion Bosnian marka ($2.1 billion).
The International Monetary Fund has cut its growth forecast for the country to zero from 0.7 percent, citing alarming economic data and the impact of the crisis in the euro zone, the Balkan region's main source of trade and investment.
The Fund warned in July that even that forecast might be optimistic. Kozaric said foreign currency reserves at the central bank fell 400 million marka to 5.9 million marka in June.
He also warned of the economic damage wrought by drought and forest fires, including a deficit in food trade of 2 billion marka.
The bank governor said he expected the IMF board to approve a new $500 million standby loan deal for Bosnia in September, "to calm the fire so the governments can finish the year without major problems".
Bosnia's two regions, the Serb Republic and the Federation dominated by Bosniaks (Bosnian Muslims) and Croats, are both running high budget deficits and urgently need an IMF cash injection.
A loan agreement was reached with the IMF at staff level in July. Rivalry between the two regions, linked since Bosnia's 1992-95 war via a weak central government, has led to a protracted political crisis that has slammed the brakes on reform, investment and progress towards mainstream Europe.
"We have to implement certain reforms, and the condition of all conditions is political stability, which we don't have," Kozaric said.
indiatimes.com
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