Real wages rose by three percent year-on-year, but youth unemployment remains high in Bosnia and Herzegovina - European Commission’s report

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The European Commission has published an overview of economic developments in candidate and pre-candidate countries, titled ‘EU Candidate Countries and Potential Candidates’ Economic Quarterly’ (CCEQ) for the fourth quarter of 2018. 

The report reminded of the World Bank’s 2019 Doing Business Report, which ranked Bosnia and Herzegovina on the 89th place among 190 countries, well below its peers in the Western Balkans. “The three areas with the worst performance were: the starting of a new business, dealing with construction permits and the handling of tax payments”, reminded the European Commission.

According to the CCEQ, the real Gross Domestic Product (GDP) growth decelerated to 3.0 percent in the third quarter, compared to a 3.6 percent growth rate in both the first and second quarter of 2018. “A key factor for this slowdown has been lower growth of household consumption, dropping to 0.9 percent, down from 3.2 percent in the second quarter. Another important reason was the slowdown of the growth of exports of goods and services, to 5.3 percent year-on-year, compared to 6.5 and 6.6 percent in the first and second quarter, respectively”, reads the report.

The European Commission also reported that the industrial production had dropped in Bosnia and Herzegovina in the last quarter of 2018, mostly because of decelerating external demand. At the same time, the number of registered employees has increased by some three percent.

In October, about 18,000 more persons were registered as employed compared to a year before. Out of those, some 13,000 registrations took place in manufacturing and trade, 2,000 in tourism, and 1,800 in the public sector, including education and health”, reads the report. But the EC also warned that the youth unemployment remained high, while the share of long-term unemployed was at around 80 percent of total unemployed.

Nominal wages rose by 3.5 percent year-on-year in the third quarter and accelerated further to 4.9 percent in November. The highest increase was in the construction sector (+6.9 percent year-on-year). Adjusted for inflation, real wages were about three percent higher than a year before”, the CCEQ concluded.