Economy
Economy of Bosnia and Herzegovina
Investment Potential, Key Industries & Market Overview
Bosnia and Herzegovina (BiH) is a country in economic transition with a diversified export sector, competitive tax system, and abundant natural resources—all making it a rising destination for regional and international investors.
Economic Structure & Reforms
Since the end of the 1990s conflict, Bosnia and Herzegovina has implemented market and structural reforms, aiming to modernize its economy. While privatization has progressed slowly and public spending remains high (around 50% of GDP), macroeconomic stability has been achieved, supported by a fixed exchange rate of the Convertible Mark (BAM) pegged to the Euro.
The decentralized government system presents coordination challenges, but reforms are ongoing, especially in trade and regulatory alignment to meet EU and WTO accession requirements.
Trade & Investment Environment
Bosnia and Herzegovina is steadily integrating into global markets:
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WTO accession efforts have triggered major trade policy reforms.
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Eligible for over 3,400 duty-free products under the U.S. Generalized System of Preferences (GSP).
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One of the lowest corporate tax rates in Europe at 10%.
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Value Added Tax (VAT) is a competitive flat rate of 17%.
In 2016, merchandise trade reached BAM 25.5 billion, with exports spanning:
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Mineral products, steel, metals
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Timber and wood products
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Furniture and leather goods
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Machinery and industrial appliances
Natural Resources & Forestry
Bosnia and Herzegovina is among Europe’s richest countries in forest coverage, with forests spanning 63% of its territory (over 3.2 million hectares). The wood industry is a pillar of the export economy:
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€1.18 billion in wood product exports in 2016 (+12% YoY)
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Only manufacturing sector with a positive trade balance over 360%
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Employs nearly 30,000 people nationwide
The country’s high-quality timber, favorable topography, and skilled workforce position it as a regional leader in sustainable wood manufacturing.
Energy Sector Growth
The energy sector is a major contributor to industrial production, accounting for 32.63% of total industry output. With vast hydrological potential and deposits of:
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Coal
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Iron ore
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Bauxite
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Copper
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Lead, zinc, and more
Bosnia and Herzegovina is investing in renewable energy and hydropower infrastructure, making the energy market an increasingly attractive field for foreign investment.
Agriculture & Land Use
Out of 5.1 million hectares of land:
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47% is agricultural land
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Only 20% is suitable for intensive farming
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Dominated by small family farms and crop production
Top agricultural outputs include:
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Vegetables (largest economic sub-sector)
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Fresh cow milk
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Maize and potatoes
The high presence of mountain pastures and grasslands creates potential for growth in livestock and dairy production.