Bosnia and Herzegovina has made important progress and significantly improved living standards over the last two decades. Before the global financial crisis of 2008-09, economic growth was strong at over 6% annually. Since 2009, gross domestic product (GDP) growth has declined considerably as pre-crisis growth engines faltered and new growth engines were slow to emerge. Relatively good revenue performance has left some room in fiscal policy to deal with the COVID‑19 crisis and to strengthen long-term economic and social resilience. To achieve rapid, inclusive and sustainable development, Bosnia and Herzegovina will need to take decisive policy action on long-term strategic priorities. This chapter takes a holistic view of Bosnia and Herzegovina’s development performance across a range of outcomes, spanning the breadth of the Sustainable Development Goals. It then draws on the remaining chapters in this part to outline strategic priorities to build on Bosnia and Herzegovina’s assets and address the key constraints it faces.

The COVID-19 pandemic and its economic consequences have had a relatively high impact on Bosnia and Herzegovina’s population and economy. The authorities acted quickly to contain the virus during the first wave of the pandemic. They also mobilised sizeable fiscal resources to mitigate the impact of illness and strict confinement measures on people and firms. This chapter reviews the sources of vulnerability and resilience that determined the impact of the crisis and that will condition the path to recovery. While the economy weathered the pandemic better than originally projected, weaknesses in the labour market and the social protection system left parts of the population unprotected. Fiscal room for manoeuvre was pivotal in allowing Bosnia and Herzegovina to respond. The crisis has also put the spotlight on structural sources of vulnerability that should receive attention as the country prepares its development strategy for the future.

Achieving rapid, inclusive and sustainable development requires progress across a range of development domains. This chapter identifies major development constraints in Bosnia and Herzegovina. It builds on multi-dimensional analysis across the five pillars of the Sustainable Development Goals: People, Prosperity, Partnerships and financing, Peace and institutions, and Planet. In each pillar, it highlights key areas where Bosnia and Herzegovina could further realise its full development potential.