The Central Bank of Bosnia and Herzegovina released the balance of payments statistics for the fourth quarter and fiscal year 2020, which resulted in a substantial downward revision, mainly of the components of the current account (AC), thus reducing the deficit of CA at the lowest level as a percentage of GDP in modern Bosnia. the story.
The CA deficit stood at -3.2% of GDP, which was in line with Raiffeisen’s forecast for fiscal 2020 (-3.1% of GDP), before its upward revision in due to the publication of negative data for Q3 CA (-3.7% of GDP), commented Raiffeisen Bank. in a note.
The main reason for improving Bosnia’s external imbalances was the decline in the trade deficit, which was down 20.8% year-on-year and amounted to € 3.2 billion ( -18.4% of GDP), also the lowest trade deficit recorded.
The collapse of domestic private investment and consumption led to a sharp double-digit drop in merchandise imports (-13.3% y / y). In contrast, merchandise exports in 2020 fell more moderately (-7.3% y / y) to 4.8 billion euros, showing some resistance to the COVID-19 crisis despite a sharp contraction in demand. foreign.
Secondary income and remittances from the Bosnian diaspora, which is also an important stabilizing factor for CA, was down 10% year-on-year. Secondary income, also important for financing private consumption, amounted to € 1.9 billion, or 10.7% of the still substantial GDP, in 2020.
Raiffeisen analysts said that given the decline in the CA deficit level in 2020, they slightly adjusted the CA deficit forecast for the year to -4% of GDP in 2021.
The major risk to Raiffeisen’s CA forecast and the overall economic scenario of a moderate rebound in 2021 (3% real GDP growth), comes in the form of a third prolonged wave of COVID-19 infections and if vaccination has not been carried out from T2, followed by a prolonged period of confinement measures at T2 and T3.