In brief

There is a high level of dysfunctionality and lack of co-ordination within the federal system of Bosnia and Hercegovina (BiH). Institutional weakness and a lack of consensus between BiH's entities—the Serb-dominated Republika Srpska (RS) and the Bosniak (Bosnian Muslim)-Bosnian Croat Federation—will continue to impede governance, particularly in the Council of Ministers, BiH's de facto central government. BiH was granted EU candidate status in December 2022, but we do not expect BiH to be granted EU membership this decade. In the rest of our forecast period (2024-28), growth will be slower than in most other east European economies, largely because of labour-market outflows and poor co-ordination of public investment projects between BiH's two entities.

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