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✓ There are rising concerns in the country that the negotiation over the EFF program will not
be reopened for discussion during the spring, after the Article IV mission is done by the IMF.
✓ The immunization process has still not started in B&H, while none of the authorities, cannot
confirm when and how many doses of vaccine will arrive from the COVAX program and
paid 1.23 mn vaccines doses for B&H.
✓ The final month of Q4 brought slightly stronger than expected rebound of the key real
sector heavy-weight indicators such are - exports of goods and industrial production
finally breaking out to positive territory. Positive outlook remains for Q1 and overall 2021.
✓ Total loans by the CBBH report as of December 2020 confirmed further deterioration with
-2% yoy decline which is the value not seen since the GFC. The decline was driven by both
segments Corporate and Retail (PI).
✓ We have adjusted the pace of recovery in 2021 GDP down to 3% yoy in real terms, under the
assumption that the distribution and vaccination process in the Western Balkan and B&H
will improve from its current slow pace, along with current quite high level of people
already recover from the COVID-19, we hope to see some level of “herd immunity” and no
further hard lock-down measures in Q3 and Q4 in B&H in 2021.
No.33
2
Highlights
Source: Central Bank of B&H, Raiffeisen BANK dd BiH
✓ The entity level Budgets for 2021 were planned and adopted with the
EFF funds planned from the IMF, but with current firms stand from RS
authorities, there are rising concerns in the country that the
arrangement will not be reopened for discussion during the spring,
after the Article IV mission is done by the IMF.
✓ At the time when the world has started with more massive vaccination
while vaccinated number of people in the SEE region is also moving
ahead (especially in Serbia with 13% vaccinated population being
second the best in Europe), the immunization process has still not
started in B&H. none of the authorities, starting from the state to entity
levels, cannot confirm when and how many doses of vaccine will arrive
or from which manufacturer to the country.
✓ The final month of Q4 brought slightly stronger than expected rebound
of the key real sector heavy-weight indicators such are - exports of
goods and industrial production of B&H, which finally have break out to
positive territory and reported positive yoy growth rates in December-
20 (manufacturing finally reported growth strong in positive territory of
+6% yoy in Dec-20). Therefore, we expect growth of industrial
production to be at minimum in range of 4.5-5% yoy in 2021.
✓ Consumer sentiment has slightly improved based on the Retail sales
data over in Q4, while December brought slight upside surprise.
Consequently, Retail sales index contracted by -6.3% yoy in the last
month of the year, marking the 10th straight month of decline in 2020.
However, it is obvious that the holiday season sales at least brought up
some retail sales turnover and dynamics in the last two months of the
year (FY retail sales index was down by -8.3% yoy).
✓ December's data published by CBBH for total loans confirmed further
deterioration ending the year with -2% yoy decline which is the value
not seen since 2009-2010, or the GFC. The decline was driven by both
segment Corporate and retail (PI).
✓ We have adjusted the pace of recovery in 2021 GDP down to 3% yoy in
real terms, under the assumption that the distribution and vaccination
process in the Western Balkan countries will improve from its current
slow pace, and along with current quite high level of people recovered
from the COVID-19, we hope to see some level of “herd immunity” and
no further hard lock-down measures in Q3 and Q4 in 2021.
Credit rating of B&H
Analysts:
Ivona Zametica, Asja Grđo
Tel.: +387 33 287 784
e-mail:
Published by:
Raiffeisen BANK dd Bosnia and
Herzegovina
Investment Banking
Research and Advisory
Highlights
Source: Agency for Statistics of B&H, Central Bank of B&H, Raiffeisen BANK dd BiH
Key macroeconomic figures of Bosnia and Herzegovina
3
Note for column of the last available data:
✓ GDP and real economy: GDP data as of Q3 2020; Industrial production and retail trade index as of December-20.
✓ Balance of payments: Trade balance and foreign reserves as of December-20. BoP data as of Q3 2020;
✓ Prices, wages, unemployment: Prices as of December-20; Wages as of November-20.
✓ Fiscal position: Public debt as of Q2 2020;
✓ Banking sector indicators: Assets, loans and deposits as of December-20. Key FSI as of Q3 2020.
Source: Agency for Statistics of B&H, Central Bank of B&H, Raiffeisen BANK dd BiH
Forecasts updates from January 2021;
Key figures
Key macroeconomic and banking sector indicators of Bosnia and Herzegovina
4
Politics
Source: Raiffeisen RESEARCH
Torn between no progress in the IMF negotiations
and delays in vaccination process
Bosnia and Herzegovina have been the second poorest country in Europe after
Albania with GDP per capita in PPPs of only 32% of the EU average for several
years. The country has been in a very difficult economic and social position for
years now, due to constant political turmoil, instability and lack of continuous
and credible reform processes, outlined to the authorities by the European
Commission (EC) and the international financial institutions (the IMF and the
WB,). One of the new signs of such fragile political and institutional strength
and credibility is also the fact that B&H has entered a new year with the IMF
negotiations being “on hold” since December 2020, over a EUR 750 mn EFF
arrangement (cca. 4% GDP) offered to the country as COVID-19 follow up
financial package. The negotiations have been halted due to a strong
opposition from Republic of Srpska (RS) authorities, over the condition
from the Letter of Intent (LOI) for making the State Registry of Banking
Accounts (all personal and legal entities accounts) within the Central Bank of
B&H (CBBH). This was defined as “transfer of responsibilities from entity to
state level authorities” by RS authorities. Although the entity level Budgets
for 2021 were planned and adopted with the EFF funds from the IMF, with
current firms stand from RS authorities, there are rising concerns in the
country that the arrangement will not be reopened for discussion during
the spring, after the Article IV mission is done by the IMF. Hence, the entity
and lower levels of government will have to find other options and sources of
financing in local and international debt markets for 2021 budgets,
colored by declining tax revenues and rising needs of economy and private
sector after the COVID-19 hit. We expect amending budgets in late spring –
early summer by the entity levels governments and lower authority
levels.
Mostar Elections were the most expected political event in the country
and event closely followed by international community due to its overall
importance for B&H’s political stability. The first voting round which was
publicly done for the Mostar’s Mayor, was suspended by the Office of the High
Representative (OHR) due to stipulations of the City’s Statue. After the second
repeated session of the elections in the City’s Council the outcome was much
clearer. Despite high hopes of civil opposition voters, the opposition B&H Block
failed to agree over a common candidate for the Mostar elections providing
majority for the ruling right-hand oriented parties (HDZ and SDA) who remain
the majority in the City Council. Hence, Mr. Mario Kordic (HDZ BiH) and Mr. Zlatko
Guzin (SDA) candidate of the “Coalition for Mostar”, entered the second round.
In the end, Mr. Kordić (HDZ BiH) I was elected as the new Mayor of Mostar
who was elected in the first City’s elections after 12 years with only one
vote ahead of SDA’s candidate. Therefore, although highly awaited the
Mostar’s Elections in the end were large disappointment for B&H and civil
oriented oppositions voters over the “the most divided city”, as the major right-
hand oriented parties who are leading the Federal government continue to
have the majority in the City Council.
At the time when the world has started with more massive vaccination
while vaccinated number of people in the SEE region is also moving
ahead (especially in Serbia with 13% vaccinated population being second
the best in Europe), the immunization process has still not started in B&H.
The country is still waiting for the first delivery of vaccines from the
COVAX WHO program, which were committed to be delivered by end of
February 2021 the latest. The country was promised to be delivered with 180K
vaccines (23.5K Pfizer and 156.5K from Astra Zeneca) out of 1.2 mn paid by the
country through the COVAX. It was on January 24, 2021 after the meeting of the
Entity Prime ministers and the Chairman of the Council of Ministers when B&H
decided to start the direct procurement and negotiation with vaccines
producers. Although discussed to order directly 202K doses of Russian
Sputnik V, none of the authorities, starting from the state to entity levels,
cannot confirm when and how many doses of vaccine will arrive or from
which manufacturer to the country (above-mentioned doses of these two
distributors would be sufficient to vaccinate 10.9% of people with one dose).
Is the IMF EFF program in question?
side
Mostar elections: new, but the
same..
Vaccination in B&H still has not
started
5
Source: BHAS, Raiffeisen BANK dd BiH
Source CBBH, Raiffeisen BANK dd BiH
Source: BHAS, Raiffeisen BANK dd BiH
Source: BHAS, Raiffeisen BANK dd BiH
B&H industry and exports of goods, finally break
out to positive territory in Dec-20
The final month of Q4 brought slightly stronger than expected
rebound of the key real sector heavy-weight indicators such are -
exports of goods and industrial production of B&H, which finally
have break out to positive territory and reported positive yoy
growth rates in December-20. Despite very strong Wave 2 of COVID-19
infections, seen in Q3 and Q4, which hit all European countries and B&H,
the industry and exports of goods proved to be quite resilient and
continued with further rebound in Q4 which was started in Q3 2020.
Real economy, driven by manufacturing and other segments of
industrial production continue to work uninterrupted in Q4 in
Europe and B&H as well, driving a further bounce back after the full
lock-down and plunge of economy in Q2 and quite pale recovery in
Q3 in case of B&H (+3.9% qoq GDP growth in Q3). Foreign demand is
strongly rebounding and driving the manufacturing lines across the
Europe, bringing also export-driven B&H manufacturing finally to
strong positive territory of +6% yoy in December 2020. However,
second largest industry category - Production and distribution of
electricity was still strongly below 2019 (-6.6% yoy) along with quite low
rebound in Mining (+0.8% yoy) which held overall Industrial production
still at moderate +2.8% yoy in Dec-2020. Therefore, overall industrial
production volume in Q4 2020 was at almost same level and
amount compared to the same period of 2019, as industrial
production was reporting almost flat reading (-0.1% yoy) in Q4-20.
Hence, we expect continuation of positive dynamics in Q1 2021 in
industrial production and manufacturing in B&H, after more than
two years of a deep recession in B&H industry which started back in
Dec-2018. The rebound is expected to be driven by strong rebound of
external demand visible on one hand but also strong “base-effect” from
very low base from after recessionary trends reported for two years in
Manufacturing. Therefore, we expect growth of industrial production to
be at minimum in range of 4.5-5% yoy in 2021.
Even more impressive was the final month, of challenging 2020, for
B&H exporters who reported overall growth in Dec-2020 by +14.8%
yoy bringing overall exports also to positive area in Q4 (+4.5% yoy)
after five consecutive quarters of negative growth from Q3 2019-
Q3 2020. Therefore, total exports of goods reached at the end total
value of BAM 10.5 bn (30.5% of GDP) which is -8.5% yoy compared to
record value of exports from 2019 and in line with our expectation for FY
2020. We expect further increase of exports of goods in 2021 with
expected growth rate in range of 6-7% yoy.
By analyzing the sector structure of exporters, we see that the exports of
Prepared food staff and beverages reported record value of
exports ever, reporting even strong positive FY 2020 performance of
+6.9% yoy or total value of exports of BAM 328 mn. Even more, out of the
most important Exports of goods categories - Furniture exports
managed also to report positive FY 2020 yoy growth rate of 1.1% yoy
or total value of BAM 1.13 bn. Also, impressive and quite resilient proved
to be exports of Plastics and rubber products and Wood and pulp
products, followed by almost equal amount of exports of Machinery
and Mechanical appliances who remain flat in 2020 vs. 2019 (-0.4%
yoy).
GDP performance (qoq)
Structure of industry
Industrial production
Real sector developments
6
Source: CBBH, Raiffeisen BANK dd BiH
Source: CBBH, Raiffeisen BANK dd BiH
Source: Agency for Statistics of B&H,
Source: CBBH, Raiffeisen BANK dd BiH
Revival of domestic demand and private
consumption in Q4 2020
On the other hand, imports of goods dynamics in Q4 2020 are
mirroring also rebound in domestic demand and consumption in
Q4 2020 in B&H economy. Namely, overall imports of goods were only
-2.3% yoy lower in Dec-20 than in previous year and amounted to BAM
1.5 bn. Therefore, also total imports of goods in Q4 went down to -
5.4% yoy (vs. double-digit record declines in Q2:-27.3% yoy and Q3:
-11.1% yoy). Domestic demand is gaining strength in Q4 in B&H which is
visible alos from the import’s dynamics and structure.
The private consumption is reviving as imports of consumer goods such
- Textile, Footwear and even Prepared foodstuff reported positive
growth rates in Q4. On the other hand, very promising is also bounce
back of more capital imported goods which started even in Q3
and continued strongly in Q4 – Metal products, Machinery and
mechanical appliances which is driven by infrastructural works
and solid construction season. However, overerl imports of goods
was still down by -13.2% yoy and amounted at BAM 16.9 bn mostly due
to historical collapse of oil prices and imports of oil products by -39.3%
yoy. Hence, overall Trade deficit thus stood at EUR -3.3 or-18.5% of
GDP being only slightly below our targeted level -20.5% GDP.
Consumer sentiment has slightly improved based on the Retail sales
data over in Q4, while December brought slight upside surprise.
Consequently, Retail sales index contracted by -6.3% yoy in the last
month of the year, marking the 10th straight month of decline in
2020 however this is improvement compared to record decline
recorded in April in the period of full lockdown with contraction of
-34.6% yoy and overall Q2 and Q3 which reported double-digit
contraction in Retail sales. Even pale monthly rebound of the Retail
index in November (0.9% mom) and December (1.2% mom), could not
pave the way for overall Retail index end the year in positive territory.
However, it is obvious that the holiday season sales at least brought up
some retail sales turnover and dynamics in the last two months of the
year.
Retail sales index reported overall decline in period Jan-Dec 2020
by -8.3% yoy, which was in line with our preliminary expectations
from April 2020 (up to – 10% yoy). All three key categories of the
index plummeted in 2020, with Automotive fuel category diving
deep in negative area by -21% yoy, accompanied with Food category
and non-food products plunging by -4.9% yoy and -4.4% yoy
respectively. All subcategories of automotive fuel and food, products
recorded negative dynamics in 2020, while four out of eleven
subcategories of non-food products category were in positive area.
Namely, IT equipment sales increased by 1.8% yoy due to enhanced
demand influenced by obligatory switching to online education
and remote work models. Pharmacy products category also rose by
2% yoy, while retail sales of sports equipment and toys rose by 4.5%
yoy. The highest increase recoded retail sales out of stores (direct
marketing, vending machines etc.) by 6.5% yoy.
All in all, the retail trade as the second most important pillar of
the economy (14.5% of GDP) showed the strong economic
contraction in the pandemic year. Absence of additional government
stimulus for household consumption support in era of rising
unemployment and insecurity as part of “COVID-19 measures”
contributed to this outcome.
Foreign trade, trade deficit
Key imports categories in 2020
(% yoy)
Key exports categories in 2020
(% yoy)BAM)
Real sector developments
7
Source: Agency for Statistics of B&H,
Raiffeisen BANK dd BiH
Source: Agency for Statistics of B&H,
Raiffeisen BANK dd BiH
Source: Agency for Statistics of B&H,
Raiffeisen BANK dd BiH
Official unemployment rate still high with 14.7K
people losing their job in pandemic year
Released November’s data by the State Agency for Statistics for the
labor market showed continuation of the positive trend started in
September, with additional 1.1 thousand people out of the
unemployment bureaus in the country. Official unemployment rate
in November reached 33.7% which was down 20 bps compared to
the previous month but still not near pre-corona level of 32.4% in March
2020. Compared to the August’s 2020 peak in terms of number of jobless
people after COVID-19 hit, when almost 30 thousand people were left
unemployed, with recent published data this number was halved to
14.7 thousand jobless people which is still extremely large part of
workforce. After corona outbreak, B&H labor market experienced great
shock losing 21K people in just one month of lockdown in April, which was
never seen before. Many companies went bankrupt at this point,
with tourism sector and its workforce being hit the hardest. Most of
the burden was carried by the real sector, manufacturing, tourism and
transport, especially small and medium enterprises.
In the final month of 2020, we do not expect stronger decline in
unemployment figures so our current unemployment target for FY
2020 closed to 17% remained unchanged. As for employed statistic
data, in November there were 814.7K employed people or 6.3K more than
in previous month. Traditionally, manufacturing industry employs the
highest number of persons or 20.1% with additional 1.3K people in
November. The strongest contribution to the overall increase of
employment, with additional 1.5K newly employed persons, brought
accommodation and food service category.
Published report on wage dynamics for 2020 showed that wages
continued its positive trend from previous year despite economic crisis.
Both average gross and net wages raise by 3.8% yoy in 2020 to BAM
1,476 and BAM 956, respectively. Health care category recorded the
highest improvement of 5% yoy for gross wages (4.7% yoy net
wages).
Tourism sector in B&H, as one of the key economic potential in B&H, is
among the most affected sectors with a massive fall of international
demand and global travel restrictions including many borders fully
closed, to contain the virus. One the fastest growing sectors in the
country was practically “put on hold” until pandemic was
restrained while many workers had to be laid-off. Solely in December,
58.9% less tourist arrivals were record with 58.1% less overnight stays
compared to 2019, with 60-70% of all arrivals and stays made by
domestic tourists.
Consequently, published data for period Jan.-Dec. 2020 confirmed
overall devastating data of tourist movements in the country. In the
referred period tourists realized 498.1K arrivals which represent
the decrease by -69.7% yoy and 1,236K overnight stays which is
decrease by -63.4% yoy compared to the same period of 2019. The
largest number of overnight stays were realized by tourists from Serbia
(27.9%), Croatia (24.3%), UAE (5.7%), Slovenia (4.7%), Turkey (3.6%),
Germany (3.1%) and Montenegro (3.0%). Overnight stays of domestic
tourists decreased by 21.5% yoy, while foreign tourists’ overnights
decreased by 79.9% yoy.
Tourism categories
Structure of unemployed
Labor market figures
Labor market developments
8
Source: Agency for Statistics of B&H,
Raiffeisen BANK dd BiH
Source: Agency for Statistics of B&H,
Raiffeisen BANK dd BiH
Source: Agency for Statistics of B&H,
Raiffeisen BANK dd BiH
Strong deflationary trends in 2020 accompanied
with retail sales index plunging by -8.3% yoy
The B&H economic landscape was marked by a strong
deflationary trend in 2020, as we have quite early anticipated
back in April 2020, when the COVID-19 crisis first hit. The final
month of the year confirmed our latest revised target, with CPI being
down by -1.6% yoy for the third month in a row in December,
bringing the FY 2020 inflation rate to -1% yoy on average, only
10bp lower than our forecasted -0.9% yoy.
At the start of Q4 we have expected some rebound in local oil products
prices but the trend was not materialized and prices remain at -1.6%
yoy in the last three months of 2020.
The COVID-19 pandemic has led to a massive slump in economic
activity globally and in B&H, causing a simultaneous supply and
demand shock for the B&H economy, resulting in CPI entering
negative territory for the first time after four years of positive
price dynamics.
Supply side shock seen in the world markets in 2020 with a historical
oil prices plunge reported in April, resulted with slump of the
“imported inflation effect” in the CPI basket (oil, gas and transport
prices consist 25% of the CPI basket) along with a depressed private
demand outlook. The strongest deflationary trends came from only
two categories, which make up 30% of the CPI basket: transport
prices (coming down by -8.6% yoy) and prices for clothing and
footwear (declining by -10% yoy) followed by furniture and
technical equipment (-1.1% yoy). The latter two categories consumer
price declines were result of continuous sales and promotions in aim of
the retailers to stimulate the consumption.
How strong deflationary developments in 2021 is also underlined by a
strong and record decline of producers’ prices which decline in 2020 by
-1.3% yoy.
Due to hope the worst of the COVID-19 crisis is behind us in 2020 and
that the spring and summer will bring increase and speeding up of
vaccination roll-out along with already reached level of immunity in our
current baseline scenario we do not expect “full and hard lockdowns”
across the Europe and in B&H in particular. Hence, we expect a
moderate rebound of global economy and international energy
and oil market in 2021 (average price for 2021: $ 56 per barrel),
along with a modest rebound of the B&H economy and domestic
demand (3% yoy real GDP growth) which would bring the inflation
level again to low-positive territory of 1.3% yoy in 2021.
In addition, with rebound of domestic recovery, along with mild growth
of wages in 2021 and moderate decline of unemployment rate we
believe that the Retail sales (14.5% of GDP) as one of the drivers of B&H
economy and overall services would also come out of the negative
territory up to 5% yoy in 2021.
Retail sales index
Retail sales categories
CPI (% yoy)
Inflation dynamics
9
Source: Central Bank of B&H,
Raiffeisen BANK dd BiH
Source: Central Bank of B&H,
Raiffeisen BANK dd BiH
Source: Central Bank of B&H,
Raiffeisen BANK dd BiH
Pandemic year resulted with loans contraction by
-2% yoy for the first time since the GFC
Similar to trends after the global financial crisis (GFC), loans dynamics
in 2020 expectedly worsened in the period after COVID-19 hit due to
immediate economic shock and widespread uncertainty in private
sector. December's data published by CBBH for total loans
confirmed further deterioration ending the year with -2% yoy
decline which is the value not seen since June 2010, or the GFC.
Total loans in December 2020 amounted to BAM 20.3 bn which is down
by -0.3% compared to previous month. Both key categories of loan
portfolio worsened in December with corporate loans being ahead
with decrease by -4.2% yoy to BAM 9.1 bn which is the worst
performance since 2015, while retail loans also decreased by -0.8%
yoy to BAM 9.9 mn as a direct result of subdued consumer
consumption. This is also the second month in row that retail
loans, as generator of loan dynamics growth are recording
negative growth rates. Namely, non-purpose retail loans are
continuing to dive further in negative area with intensified
decrease in December by -2.8% yoy and this loan category was
usually the hey driver of Retail loans (74% shard). Only mortgage loans
are constantly rising (7.2% yoy in December) throughout 2020.
Considering bad performance of non-purpose loans which are 74% of
total retail loans, overall negative performance of this segment was
unavoidable.
On the funding side, total deposits continue to grow reaching
record high amount of BAM 24.9 bn at growth rate of 4.9% yoy.
Moderate growth rate of retail savings by 3.9% yoy to BAM 13.8 bn was
followed by double digit growth rate of corporate deposit by 12.6%
yoy. High uncertainty of economic outlook in the pandemic conditions
led to loans decline and deposit strengthening of both, companies and
private individuals. Given that previously anticipated growth of overall
loan portfolio grounded on expected positive impact of the Entity
Guarantee scheme program has not been materialized due to many
administrative obstacles in implementation our FY target for overall
credit growth in 2020 has been revised downward to -2% yoy
which is the first year of credit growth decline since 2009-2010
and GFC.
Federal Banking Agency (FBA) published recently preliminary
report on the performance FB&H banks as of Q4 2020. According to
the same, similar to previous report for Q3 2020, profitably of the
FB&H banking sector declined by -38.1% yoy amounting to BAM
169.6 mn. The total revenues of the 15 banks declined by -13.8% yoy,
with interest revenues being down by -4.8% yoy, and other revenues
declining by as much as -28% yoy. In addition, total expenses rose by
10.7% bringing overall profitability deep in negative area. Total assets
of FB&H banking sector rose by 0.7% to record level of BAM 24.4 bn.
Pandemic pressure on profitability of the sector in 2020 was
strong and most probably it will pressure banking sector outlook
also in 2021. However, stability of the sector and moderate
rebound should not be endangered. Banks proved to be able to meet
all depositors' demands, so excessive withdrawal of deposits did not
take place showing the confidence in the banking system.
Banking sector key categories
Deposits dynamics
Loans dynamics
Banking sector
10
Source: RBI/Raiffeisen RESEARCH
Raiffeisen BANK dd BiH
Source: RBI/Raiffeisen RESEARCH
Raiffeisen BANK dd BiH
Source: RBI/Raiffeisen RESEARCH
Raiffeisen BANK dd BiH
Our baseline scenario remains intact: estimated
GDP of -4.8% in 2020 followed moderate rebound
of 3% in 2021
The first three weeks of February 2021, despite some rises in the
last couple of days, have seen still very positive trends in terms of
the COVID-19 developments in B&H, with only 9 people daily
infected on 100K people (or 301 people on average until February
18th).
This puts B&H still in the group of the best performing countries in CEE
and Europe in terms of the COVID-19 trends, despite one of the loosest
containment measures implemented during the autumn-winter Wave 2
of COVID_19. The decline in second half of Jan-Feb 2021, could be
explained by a quite long period of high daily infected numbers, as the
second wave in B&H has started even during summer months (August).
B&H has still not received the vaccines from promised first
delivery from the COVAX WHO program. The country's State
Ministry of Civil Affairs has received a commitment from the
COVAX to receive the first delivery of 180K vaccines (23.5K Pfizer
and 156.5K from Astra Zeneca) until the end of February 2021, out of
1.2 mn paid by the country through the COVAX program. However,
no progress and start has been reported in terms of immunization
process. In addition, the country is trying to negotiate and get the
Russian vaccine Sputnik V, through direct negotiations and purchase of
202K, but there are no progresses in these fronts as well. Not even a
single authorities’ level in B&H, starting from the state to entity
levels, cannot confirm when and how many doses of vaccine will
arrive or from which manufacturer to the country (above-
mentioned doses of these two distributors would be sufficient to
vaccinate 10.9% of people with one dose).
As said, Q3 GDP was in line with our overall estimate being at
-6.3% yoy (our estimate was in range of -5 to -6% yoy thus brining
overall GDP performance in Q1-Q3 period to -4.5% yoy H1 2020.
GDP performance was a bit better than expected and we see from the
heavy weight indicators for Q4 2020 (industrial production, external
trade data and to some extent retail sales and construction data) that
current containment measures are not affecting especially industrial
production and exports rebound in Q4. Hence, we expect lower
decline in Q4 2020 in range of -4.5% to -5.5% yoy which brings
overall GDP performance at -4.8% yoy being the main reason for our
slight downward adjustment of our FY 2020 in December 2020 (from
initial -5.2% yoy since April 2020).
Also, we have adjusted the pace of recovery in 2021 GDP down to
3% yoy in real terms, under the assumption that the distribution
and vaccination process in the Western Balkan countries will
improve from its current slow pace, and along with current quite
high level of people already recovered from COVID-19, we hope to
see some level of “herd immunity” and no further hard lock-down
measures in Q3 and Q4 in 2021. With this we would expect to see
slight lifting of some of the containment measures and normalization
of economic life through the spring and summer 2021.
C/A, FX reserves and FDIs
Unemplyoment and inflation
Key indicators recovery
Economic outlook
11
EUR/BAM (avg) FX reserves (EUR bn)
C/A balance (% of GDP) Budget balance (% of GDP) Net inflow of FDI (% of
GDP)
Industrial production (%
yoy)
Unemployment rate (%) Inflation (% yoy)
Source: Agency for Statistics of B&H, Raiffeisen BANK dd BiH
Source: Agency for Statistics of B&H, Raiffeisen BANK dd BiH
Source: Central Bank of B&H, Raiffeisen BANK dd BiH
Source: Central Bank of B&H, Raiffeisen BANK dd BiH
Public debt (% of GDP)
Nominal GDP (EUR bn)
Chart page
Real GDP (% yoy) GDP per capita in EUR
12
Raiffeisen BANK d.d. Bosna i Hercegovina
Investment Banking
Sanja Korene, Head of Investment Banking; Phone: + 387 33 28 71 22, e-mail:
Ivona Zametica, Chief Economist/Head of Research and Advisory; Phone: + 387 33 28 77 84, e-
mail: [email protected]
Asja Grđo, Senior Capital Market Specialist; Phone: +387 33 287 762; e-mail:
Nadira Čenanović, Head of Brokerage Business; Phone: +387 33 28 76 47, e-mail:
Raiffeisen CAPITAL a.d. Banja Luka
Vedrana Đukić, Director; Phone: + 387 51 23 14 90, e-mail:
Editor: Ivona Zametica, Chief Economist
Publisher:
Raiffeisen BANK d.d. Bosna i Hercegovina
Zmaja od Bosne bb, 71000 Sarajevo
www.raiffeisenbank.ba
Raiffeisen direct info: +387 33 75 50 10 • Fax: +387 33 21 38 51
The cut-off date for the data used in the publication February 19th, 2021
This publication was completed on February 24th, 2021
The publication was published on February 24th, 2021.
Impressum
13
Disclaimer Financial Analysis
Publisher: Raiffeisen BANK dd Bosna i Hercegovina (abbreviated as “RBBH”)
RBBH is a credit institution with the registered office Zmaja od Bosne bb, 71000 Sarajevo Bosnia and Herzegovina
Raiffeisen RESEARCH is an organisational unit of Raiffeisen Bank dd Bosna i Hercegovina
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explicitly otherwise, references to legal norms refer to norms enacted by the Bosnia and Herzegovina.
This document is for information purposes and may not be reproduced or distributed to other persons without RBBH’s
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Market or the Stock Exchange rules or any other comparable foreign law. An investment decision in respect of a security,
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This document does not constitute a personal recommendation to buy or sell financial instruments in the sense Law on Capital
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whatsoever. This document is not a substitute for the necessary advice on the purchase or sale of a security, investment or
other financial product. In respect of the sale or purchase of securities, investments or financial products, your banking advisor
can provide individualised advice which is suitable for investments and financial products.
This analysis is fundamentally based on generally available information and not on confidential information which the party
preparing the analysis has obtained exclusively on the basis of his/her client relationship with a person.
Unless otherwise expressly stated in this publication, RBBH deems all of the information to be reliable, but does not make any
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In emerging markets, there may be higher settlement and custody risk as compared to markets with established
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The information in this publication is current, up to the creation date of the document. It may be outdated by future
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Disclaimer