Standard and Poor's: BH Credit Rating Remains B+ with Stable Outlook

International rating agency Standard and Poor's (S&P) has kept the credit rating of Bosnia and Herzegovina 'B+' with stable outlook.

In the report for Bosnia and Herzegovina, S&P analysts state that in the 2024-2027 period, economic growth will increase by around 3% in real terms, due to higher spending brought about by the inflation pressure decline, several investment projects and external demand strengthening. Despite internal and external challenges, the economy of Bosnia and Herzegovina has showed resilience during 2023, with estimated real GDP growth of around 2%, following the expansion of almost 4% in 2022.The economic growth slowdown is a consequence of lower performances of the key trade partners of Bosnia and Herzegovina, mainly from the European Union, and the high inflation effect on private spending. The bright note, according to analysts, is a strong expansion of tourism of 15% in the first three quarters of 2023, supporting the country's economic growth.

From 2024, according to S&P analysts’ estimates, Bosnia and Herzegovina will see economic growth supported by the economic recovery of the key trade partners in the euro area, which should stimulate exports growth. Inflation in November fell down to 1.7%, which is expected to impact the real growth of wages and private spending. Several large investment projects are also expected, particularly in the area of energy and road construction, which will support growth during the following several years.

The net debt of Bosnia and Herzegovina is around 20% of GDP, which is a moderate debt level for a developing country, while analysts expect the current account deficit to remain at a low level in the next four years as well. It is also expected that Bosnia and Herzegovina will keep the currency board arrangement.

According to analysts, credit rating can rise if consensus based political decisions are reached, which, in medium term, could accelerate reforms and economic growth.