Bosnia's GDP will likely shrink by 4.5 percent in 2020 due to the coronavirus pandemic, the European Bank for Regional Development (EBRD) said in it's Regional Economic Prospects for 2020 report, adding that the GDP will likely grow by 6 percent in 2021.

“Bosnia and Herzegovina will suffer a fall of GDP by 4.5 percent in 2020 because of the economic impact of the coronavirus pandemic. The Bank expects the country to recover in 2021 with GDP growth of 6.0 percent,” the report said.

According to the latest edition of the EBRD Regional Economic Prospects, “a likely drop in remittances (which usually amount to about 11 percent of GDP) will negatively affect consumption, while the closure of borders and factories will constrain exports and supplies to and from main trade partners.”

he Bank predicts that recovery will depend on a gradual relaxation of restrictive measures.

The biggest drop in economic activity is expected in Croatia, Latvia and Lithuania – by 7 percent, while Hungary and Poland should experience a 3.5 percent drop.

The recovery in 2021 should range from the projected 7 percent growth in Slovakia and Estonia to 4 percent in Poland and Hungary.

Disruptions in value chains are now hampering production and the recovery is likely to be delayed by weaker external demand, the EBRD predicts. Governments, meanwhile, have introduced extensive measures to preserve employment and support companies in hibernation, which will result in deteriorating public finances in all countries in the region, the EBRD noted.

In the entire group of transition economies in which the EBRD operates, activities should fall by an average of 3.5 percent in 2020. In addition to Central Europe and the Baltic countries, the group includes Central Asia, Eastern Europe and the Caucasus, the southeastern European Union, the southern and eastern Mediterranean, the Western Balkans, and Russia and Turkey.

Transitional economies as a whole should more than absorb this year's recession in 2021, with an estimated growth rate of 4.8 percent.
The EBRD noted that these estimates are based on the assumption of gradual mitigation of pandemic measures and normalization of life in the second half of the year.