THE INFLUENCE OF GDP ON THE FOREIGN TRADE OF BOSNIA AND HERZEGOVINA WITH A FOCUS ON THE EXCHANGE OF GOODS WITH THE COUNTRIES OF THE EUROPEAN UNION

Abstract

Bosnia and Herzegovina is a country in transition with an economy that imports more than it exports, but the importance of exports is crucial for sustainable economic growth. This paper investigates the impact of the gross domestic product (GDP) on the foreign trade of Bosnia and Herzegovina, focusing on the exchange of goods with the countries of the European Union. The analysis covers the period from 2009 to the end of 2022 to look at long-term trends. The main goal of the research is to determine the existence of a statistically significant influence of GDP on the exports and imports of the country. Using the t-test, the value of exports/imports between the countries of the European Union and other countries is also analyzed. Firstly, an analysis of macroeconomic trends was conducted, which is crucial for understanding the economic situation in BiH. Monitoring the trends of GDP, imports, and exports provides insights into the country’s economic activity. GDP trends reflect economic growth or recession, while the analysis of imports and exports provides information on trade activities. From 2009 to the end of 2022, the GDP of BiH mostly showed a rising trend, with exceptions such as in 2012. The GDP growth rate varied during the analyzed period, with the lowest values during the years of the global financial crisis and the Covid-19 pandemic, and the highest in 2021. Imports and exports of Bosnia and Herzegovina are also important indicators of economic activity. The value of imports and exports mostly showed an upward trend, although decreases were recorded in some years. The analysis of the relationship between imports and exports indicates a trade deficit, which can be a challenge for economic stability. The country faces challenges in achieving balance in the foreign trade balance, given the higher imports compared to exports. After analyzing macroeconomic trends, a regression analysis was conducted to determine the impact of GDP on the imports and exports of Bosnia and Herzegovina. The results show a statistically significant positive correlation between GDP and imports, as well as exports. This confirms that economic growth (GDP) positively influences the country’s trade activities. Additionally, the trade exchange of Bosnia and Herzegovina with the countries of the European Union and other countries was analyzed. Although no statistically significant difference was found, the data show a significant volume of trade with the European Union countries. Favorable trade agreements facilitate access to the EU market for Bosnian products, while the connection with the EU enables access to technology and investments that support economic development. Further development of trade relations with the EU is expected to support the economic growth of this country and open up new business opportunities. The results of the research provide insight into the trends of the mentioned variables during the analyzed period. Based on the obtained results, concrete recommendations are given for increasing the export of Bosnia and Herzegovina. The paper contributes to the understanding of the economic dynamics of this country in the trade context, emphasizing the importance of strategies for improving exports and strengthening economic stability.