Nowcasts of the GDP and the inflation

The Central Bank of Bosnia and Herzegovina (CBBH) projects the annual growth of real economic activity in the second quarter of 2022 at 4.2%, based on available information until mid-September 2022.

All monthly data, especially retail trade, industrial production, and exports, indicate that the growth of the domestic economy was also recorded in the second quarter. This expected growth of economic activity in BH implies a real annual growth of 4.8% in the first half of 2022. Despite the disruption in global supply chains and the rise in food and energy prices, in the second quarter a significant growth of real GDP was recorded in the EU, as well as in other neighbouring countries, which had a positive impact on the trends of domestic economic activity. However, economic activity is expected to slow down in the second half of the year, given the continuation of unfavourable factors, primarily in the supply of natural gas and electricity.

On the basis of official data from July 2022, inflation was 16.7%. The total annual inflation growth could be expected to amount to around 14% in 2022, however, there is a high degree of uncertainty related to this projection. The strongest uncertainties related to the projection refer to future price trends in international markets, and also effects of policies aimed at limiting some prices and announced revoke of excise duties, which can decrease the expected inflation growth in the current year.

The growth of consumer prices in BH is higher on the average by around 6 percentage points than consumer prices in the euro area in 2022.

During the first seven months, food prices at the annual level in BH were higher by 19.3%. In the same period, these prices at the EU level increased by 8.8%. Higher growth rates were recorded in almost all subcategories of food in the local market in relation to comparable countries, which was particularly visible in case of oils and fats. Countries in the region have been continually restricting the growth of basic prices of food, thus decreasing inflation to some extent.

Graph 1. Contribution to the Annual Changes of the Domestic Consumer Prices and the Nowcast

Source: BHAS, CBBH