Bosnia and Herzegovina: Regional Trust in Market Weakens as FDI Drops

The inflow of foreign direct investment (FDI) into Bosnia and Herzegovina (BiH) experienced a notable decrease in 2024, signaling a shift in regional investor confidence. According to Sarajevo Times, the total investment inflow reached 1.76 billion BAM, marking a reduction of 301.2 million BAM from the previous year’s 2.06 billion BAM.

A Regional Investment Landscape

Croatia emerged as the largest investor with contributions amounting to 391.1 million BAM, forming over one-fifth of the total inflows. Not far behind are Germany and Slovenia, investing 255.3 million BAM and 247.1 million BAM respectively. The figures highlight an interesting regional reliance on neighboring countries, hinting at trust yet vulnerability in global investments.

Sectoral Preference in Foreign Investments

FDI continued to favor the financial services sector, attracting a significant 503.8 million BAM. Retail trade and wholesale also witnessed substantial interest, securing 219.8 million BAM and 205.1 million BAM accordingly. This preference indicates a steady confidence in these economic activities despite an overall decline in investment.

Long-Term Dependence on Regional Capital

As of the end of 2024, BiH’s total foreign direct investment stock stood at an impressive 21.22 billion BAM. Croatia maintained its position as a dominant investor with a stock value of 3.22 billion BAM. Austria and Serbia followed closely with investments totaling 2.9 billion BAM and 2.8 billion BAM, respectively.

Prospects and Challenges for BiH

Despite the decrease in FDI inflows, the distribution of investments largely concentrated in financial services, telecommunications, and wholesale trade sectors. These key areas still hold promise for potential gains and may represent strategic opportunities for local and foreign investors looking to capitalize on the evolving economic terrain in BiH.

According to Sarajevo Times, the Central Bank of BiH (CBBiH) has been revising past investment data to reflect the most accurate picture possible, a move that signifies a commitment to transparency and improvement in the years ahead.

In conclusion, while shifts in investment may reflect challenges, they also illuminate potential avenues for growth and development, which could be pivotal in restoring and boosting investor confidence across borders for Bosnia and Herzegovina.