Republika Srpska’s industrial production continues to slide, wood sector hit hardest

According to the latest official figures, overall industrial output in the entity fell by 4.1 percent in the first seven months of this year compared to the same period in 2024. The wood processing sector alone recorded a sharp drop of 11.4 percent, while furniture production slipped by 2.4 percent.

“For two and a half years now, we have seen persistent negative trends in wood processing and furniture production. The domestic wood industry is heavily export-oriented and tied to economic conditions in the European Union, our main trading partner. Any changes there are immediately felt here, especially in the wood sector,” said Igor Andric, Secretary of the Association of Forestry and Wood Processing at the RS Chamber of Commerce, in a statement to FENA.

Andric stressed that 2024 was disastrous for the industry, with production plummeting by 40 percent compared to 2023.

“Discussions with producers suggest some signs of mild improvement, but the situation is still far from favourable,” he added.

Despite the production slump, exports in the wood and furniture sectors rose by 4.3 percent in value terms. Andric believes this reflects higher prices rather than increased output, noting the contradiction between falling production and rising export revenue.

The negative trend has already forced some companies to close their doors, while others have been cutting jobs due to shrinking orders from abroad. In the first seven months, employment in wood processing fell by 4.7 percent, while furniture manufacturing saw a 6.8 percent drop in its workforce.

Efforts are underway to secure new markets, particularly in the Middle East, North Africa, and the United States. But Andric cautioned that competitiveness remains a challenge.

“There are contracts signed with some partners, but percentage-wise, they remain negligible. I know of a few companies that made contacts in the U.S., but tariffs are once again creating obstacles,” he explained.

Andric concluded that the recovery of the sector, and the broader domestic economy, remains closely tied to economic trends in the European Union.