Nowcast of GDP for the Second and Third Quarters of 2026 and Inflation in Short-term Period 9/18/2026 Tweet Nowcast of GDP for the Second and Third Quarters of 2026 and Inflation in Short-term Period - PDF Key points: The CBBH estimates annual real GDP growth at 2.2% in the second quarter of 2026, which represents a slight upward revision, by 0.2 pp compared to the previous round. Current estimates do not bring any significant changes in the short-term economic growth outlook, confirming expectations of relatively moderate dynamics of economic activity in Bosnia and Herzegovina. For the third quarter of 2026, the CBBH estimates annual real GDP growth at 2.3%. Available indicators indicate the continuation of relatively moderate dynamics of economic activity, with risks from the international environment still present and also uncertainty regarding the external demand trend. Inflation has been revised downwards significantly in this round. We currently estimate that headline inflation could be 3.7% and core inflation 4.2% in the third quarter of 2026. A significant downward revision of inflation compared to the previous nowcast was made primarily due to the unexpected sharp slowdown of official inflation in June and July 2026, and a weaker transmission of the initial shock of rising transport prices and utility costs to other consumer price components. At the annual level, the prices of food and non-alcohol beverages were lower in June and July, partly due to the base effect. However, the level of the prices of food and non-alcohol beverages is quite high, following a significant increase in the previous period. Also, the level of prices of basic foodstuffs in BH does not differ significantly from prices in the surrounding countries. Due to the high share of food in the household consumption, their price level has a significant impact on costs and living standards. We expect inflation pressures to remain present and considerable, especially external ones related to energy prices, and we estimate that headline and core inflation could amount to 4.1% in the last quarter of 2026. At the same time, food prices are also expected to rise in the last quarter, spilling over from foreign to the domestic market with a significant time lag.
