The common regional market, which the Western Balkan leaders agreed to form at their meeting in Sofia last year and which is supported by the EU, is a springboard for closer integration between the region with the EU Single Market and is crucial for the region and its privileged relationship.
In the first six months of this year, Bosnia and Herzegovina’s external trade amounted to 8.38 billion euros, which is 1.6 billion euros or 23.62% more than in the same period in 2020. We talked with the President of the Foreign Trade Chamber of Bosnia and Herzegovina, Ahmet Egrlić, about the recovery of the Bosnian economy and the country’s cooperation with Serbia and the region.
The year 2020 was marked by the pandemic-induced crisis that affected the economies of all regional countries. How is Bosnia and Herzegovina’s economy recovering this year?
Our economy is currently in a recovery phase and we cannot fully predict its course as it is impossible to predict whether the pandemic will continue and the global vaccination rate. In 2020, Bosnia and Herzegovina’s economy recorded a 6.5% decline.
In the period from January to June 2021, Bosnia and Herzegovina’s total foreign trade amounted to KM 16,433,225,000, which is a 23.62% or KM 3.14 billion increase compared to the same period last year. The country’s export amounted to KM 6,654,279,000, a 30.53% or KM 1.55 billion increase. Imports amounted to KM 9,778,946,000, which is 19.33% or KM 1.58 billion higher. The total external trade balance increased by 0.88% and amounts to -3,124,666,000 KM. The export to import ratio went up by 9.39% and stood at 68%. Considering that we took last year as the basis for comparison, when our industrial production began to decline, as well as the decline in exports to the EU market caused by the uncertainty of the US-China trade war, stagnation of the German economy, violation of the CEFTA agreement by Kosovo, non-implementation of free trade agreements that we had with Turkey, Bosnia and Herzegovina’s external trade has still recorded an increase.
Bosnia and Herzegovina’s export amounted to KM 6,654,279,000, a 30.53% or KM 1.55 billion increase
Which economic sectors were most affected?
The services sector was the most affected. Last year, there were 64% fewer overnight tourist stays compared to 2019, and the transport sector, as the most connected to tourism, recorded a significant decline in all road, rail and air transport indicators. In terms of road passenger transport, kilometres travelled and the number of transported passengers, there was an over 80% decline, which shows how adverse the impact on this branch of the economy was. Given that the share of travel and tourism in the country’s GDP is about 10%, the decline in this economic sector has affected the entire Bosnia and Herzegovina’s economy. In general, the wood industry has managed to keep afloat, given last year’s conditions to do business, and has recorded a surplus of nearly KM 924 million.
The import of the most significant products, except for medicines, has also decreased. We imported medicines worth over KM 548 million, mainly antibiotics and insulin, due to higher demand in the domestic market given the epidemiological situation. The metal-processing sector is recovering from the restrictive period and it ranks first in terms of value in exports and imports. During the pandemic last year, this sector’s export experienced a sharp decline, especially in the automotive industry, while according to current indicators, the recovery stands at about 30%.
How would you rate the overall economic cooperation between Serbia and Bosnia and Herzegovina today?
After the European Union, CEFTA countries are the second most important external trade partners of our country, especially Serbia, with which we traded the most out of all CEFTA countries.
To date this year, the trade between Bosnia and Herzegovina and Serbia has been commendable. In the first half of this year, we exported KM 732 million worth of goods to the Serbian market (32% more than last year). Imports from Serbia amounted to KM 1.42 billion a 20% increase compared to last year. Analyzing the structure of this trade, we can notice that we traded with Serbia mostly chemical/pharmaceutical, wood, agricultural and food products.
We see Bosnia and Herzegovina integrated into the common regional market, which in the future, will be integrated into the EU as such
What opportunities for further development of the cooperation between the two countries are there and in which sectors?
The general goal of the trade between our two countries is to boost socio-economic development in the Republic of Serbia and Bosnia and Herzegovina, through the implementation of targeted and concrete activities, and joint and efficient use of resources.
Maintaining and improving very favourable trade between Serbia and Bosnia and Herzegovina has to be nurtured because, in terms of the trade volume, Serbia is our most important partner. When we take into account that all economic sectors participate in this trade, this validates the importance of maintaining good relations between Bosnia and Herzegovina and Serbia, both in business and otherwise.
What can regionalization bring to the Western Balkan countries?
The common regional market, which the Western Balkan leaders agreed to form at their meeting in Sofia last year and which is supported by the EU, is a springboard for closer integration between the region with the EU Single Market and is crucial for the region and its privileged relationship.
Last year, we noticed that the three-year-long implementation of MAP REA, unfortunately, resulted in less than the desired, clear and tangible benefits for companies and people in the region. From a business perspective, one of the few notable benefits of this document was the mobile telephony roaming agreement that came into force recently.
Therefore, the Western Balkans 6 Chamber Investment Forum was actively involved in the development of the Action Plan for the Common Regional Market. We advocated for concrete measures, fully in line with the needs and requirements of companies in the region and based on the four EU freedoms:
– Free movement of goods (mutual recognition of sanitary and phytosanitary documents for fruits and vegetables and veterinary certificates, improved border crossing infrastructure (BCP), all border agencies opened 24-hours-a-day, an extension of the World Bank’s green corridors to include the EU),
– Free movement of services (mutual recognition of job qualifications, the introduction of a license-free system for intra-company transfer WB6, mutual recognition of qualified electronic signatures and other trusted services…),
– Free movement of people (enabling the mobility of students, scientists and researchers, mutual recognition of job qualifications, abolition of visas for tourists…) and
– Free movement of capital (harmonization of access to the EU regulatory framework for the financial market …).
I am confident that regionalization is the key to progress and future development of all of us, hence through the chamber system and the Chamber Investment Forum, we are trying to animate companies to accept this idea and encourage them to have more intensive cooperation.
What development direction will Bosnia and Herzegovina take in terms of the EU and the region?
I think I answered this question in part earlier. Simply put, we see Bosnia and Herzegovina integrated into the common regional market, which in the future, will be integrated into the EU as such.