The CBBH publishes the estimates of potential GDP and GDP gap for Bosnia and Herzegovina until 2028

Estimates of potential GDP and GDP gap for Bosnia and Herzegovina until 2028

Key messages:

• The Central Bank of Bosnia and Herzegovina (CBBH) publishes the official estimates of the potential GDP and GDP gap for Bosnia and Herzegovina (BH), made by using the extended production function method. The estimate covers the historical period from 2008 and the medium-term projection horizon of 2026-2028. The estimates incorporate the results and assumptions of the spring round of the CBBH medium-term macroeconomic projections.
• According to the current estimate, the potential GDP growth remains moderate in the projection horizon and is slightly above 3.0%, with signs of slowing down towards the end of the projection period. The estimated growth rate of potential GDP is 3.38% in 2026, 3.32% in 2027 and 3.07% in 2028.
• In the period 2022-2025, real economic growth was above potential, partly due to strong nominal wage growth in 2025, as a result of which the GDP gap estimate for 2025 was revised, compared to the May 2025 estimate. Over the projection horizon, we are still expecting a slight spread between the real and potential levels of economic activity, with a GDP gap of -0.26% in 2026, and the negative gap closing by the end of the projection horizon.
• In the long term, the estimated potential GDP growth remains insufficient for a stronger real convergence towards the European Union average. Increasing productivity and strengthening labour supply stay the key preconditions for accelerating potential economic growth. Structural reforms in the labour market, including those that stimulate stronger engagement of the inactive working-age population, combined with measures to increase productivity, have a significant potential to increase long-term potential GDP growth in BH.
• With the aim of further improving model estimates, the CBBH is currently working on productivity assessments at the level of companies and industries in BH, and we will replace a part of the current model assumptions with model estimates as early as next year.

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