The CBBH publishes the potential GDP and GDP gap estimates for BH for the first time 6/5/2025 Tweet PDF - The CBBH publishes the potential GDP and GDP gap estimates for BH for the first time Key messages Using the estimation methodologies which are standard for most central banks, especially in countries with similar levels of development, the CBBH has estimated the potential GDP and GDP gap for the historical period, since 2008, and the current medium-term projection horizon. Estimates according to different methodologies are consistent, which we consider a sign of their reliability, while the official one is methodologically comparable to the estimates for the EU member states. According to our first official projections, potential GDP growth has not accelerated significantly in almost two decades. The average historical growth rate of potential GDP, for the 2008-2024 period, is estimated at 2.4%. We currently estimate that the annual growth rate of potential GDP in 2025 is 3.6%. At this potential GDP growth rate, and our projection of real GDP growth, the GDP gap is slightly negative (-0.1% below the projected real GDP). With the average potential GDP growth rate of 3.5% over the medium-term projection horizon, and our real GDP growth projection for the same period, we expect the GDP gap to close slowly. The aggregate capital level has had a key role in the potential GDP growth, but we estimate its contribution will decrease in the long-term horizon. The labour factor is already recording a decreasing contribution due to demographic changes and the challenges which BH is facing in the labour market. Consequently, given the current circumstances, in long term, we expect a slight slowdown of potential GDP growth. The currently estimated growth rate of potential GDP is not sufficient for long-term sustainable growth and stronger real convergence towards the EU. Structural reforms in the labour market, including those that stimulate stronger engagement of inactive working-age population, combined with measures for increasing productivity, have significant potential to increase the long-term growth of potential GDP in BH. We plan to publish estimates of potential GDP and GDP gap annually, with the spring round of medium-term macroeconomic projections. For purposes of transparency, and also strengthening applied analytical research, we will soon publish a technical paper, with the features of potential GDP estimate model.