Citizens of Bosnia and Herzegovina (BiH) strive to increase living standards in the future, to have good jobs, better infrastructure and public services, a healthy and sustainable environment, and membership in the European Union (EU), but the country is far from achieving these aspirations and faces critical by the challenge of rapidly losing population — its most precious resource, is stated in the document “Updated systematic diagnostics of the country” of the World Bank.
”Every year thousands of people leave the country in search of a better life. The country cannot afford further population loss, and to motivate people to stay, it will be necessary to fulfill their desires for a better life for themselves and their families. This is possible, but it requires decisive action by all actors to overcome the identified challenges,” the document states.
The current development path of BiH will not create the opportunities that the population needs. BiH has managed to maintain macroeconomic stability, achieve a fiscal surplus and reduce public debt, but this is not enough. Although economic growth has been stable in recent years, at approximately 3 percent, it is simply too little to carry the path of shared prosperity, Avaz reports.
If BiH continues to grow at the same rate, it would take 100 years for it to reach the EU standard of living. Moreover, the current growth cannot be taken for granted, given that it relies heavily on sources that are not sustainable in the long run (eg general consumption and public sector consumption), according to the World Bank.
To ensure sustainable growth, the level of investment – currently 18% of gross domestic product (GDP) – needs to increase, as does labor productivity, which is still low.
BiH’s integration into global markets is limited. The level of exports, although in slow growth, is still, at 38 percent, low for a small economy, and two-thirds of exports are to low-value-added sectors.
Foreign direct investment (FDI) is low and concentrated in the energy sector, while only 4 percent falls on export sectors. Fiscal revenues, at 44 percent of GDP, are relatively high, but do not provide quality public services, and the pattern of spending (small public investment, large allocations for wages) undermines growth.
Although other countries in the Western Balkans and Europe face similar development challenges and economic situations, in other countries there is a sense of targeted political action to remove obstacles to growth and prosperity, which BiH largely lacks due to significant progress in much-needed reforms, is stated by World Bank experts.
Poverty remains a problem, with the deteriorating situation of the poor in recent years.