CBBH has expanded the list of flagship analytical reports with the Macroeconomic Imbalances Report 1/7/2025 Tweet Since 2024, the Central Bank of Bosnia and Herzegovina (CBBH) has been publishing a regular, annual Macroeconomic Imbalances Report(https://www.cbbh.ba/Content/Archive/1260?lang=en). The report differs from previous flagship analytical reports because it is designed to look at the domestic economy in the context of risks from internal and external imbalances, not just trends in key macroeconomic variables. In order to strengthen the resilience of the European Union economy, procedures have been established for macroeconomic imbalances, according to which fourteen indicators are monitored, grouped as indicators of external imbalances and competitiveness, indicators of internal imbalances, and indicators of imbalances in the labor market. In addition to the basic fourteen indicators, a set of additional indicators has been defined, which complement the monitoring of initial signs of imbalances. For all indicators, reference values have been defined, some of which differ between euro area and non-euro area member states, having in mind that the exceeding of the reference value for individual indicators does not automatically mean that a macroeconomic imbalance exists. The number and intensity of exceeding the threshold values are observed, and based on the review of indicators, the European Commission conducts in-depth analyses of the economies of individual member states, and proposes to the Council a conclusion on whether macroeconomic imbalances exist, and if so, whether they are excessive. Candidate countries for EU membership are not obliged to report according to the basic indicators of macroeconomic imbalances. However, in the CBBH, with the aim of sharing our perception of risks in the domestic economy, we have decided to publish an annual Report on Macroeconomic Imbalances. We believe that in this way we contribute to the EU integration process of the country. Although the indicators were calculated in the CBBH, as far as possible in accordance with the indicators published on Eurostat (https://ec.europa.eu/eurostat/web/macroeconomic-imbalances-procedure/information-data), any direct comparison of BH with the EU, without taking into account the specificities of the country, even under the assumption that all indicators are fully harmonized, should be avoided. EU countries have reached a certain level of development, although there are significant differences between them, and operate in a single environment, in terms of legal regulations. BH is a small, open economy, far below the average level of development of EU members. Therefore, the existence of certain imbalances is to be expected in periods of faster convergence towards the EU. Also, the initial level of an indicator, or its multi-year average, must be taken into account when assessing whether the change in the observed year represents a decrease or increase in imbalance. The latter is especially the case if the change and the reference value of the indicator have different signs in front of them. Judging by the set of quantitative indicators of macroeconomic imbalances, in 2023, Bosnia and Herzegovina recorded internal imbalances in the form of a continued high unemployment rate and high growth in real estate prices, as well as external imbalances related to further growth in unit labor costs, which negatively affect competitiveness. We hope that our flagship analytical report will result not only in a significant number of readers, but also that it will stimulate analytical reporting and applied macroeconomic research, with the aim of better understanding trends and risks in the domestic economy.
