Macroeconomic Forecast Bosnia

July 2006 | Macroeconomic Forecasts

We have upped our inflation forecast for this year for both the Federation and the Republica Srbska, to give a national average CPI number for 2006 of 6.0%. This has been driven higher by the VAT reforms, which the IMF believes has added 3-3.5pp to CPI this year. We anticipate that price pressures will fall off significantly next year once the base effects work their way out of the index. Given that this is a one-off effect we do not expect that there will be any serious implications for competitiveness or the sustainability of the currency

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