Bosnia and Herzegovina’s Defense Exports Show First Signs of Slowdown After Years of Growth
Bosnia and Herzegovina’s defense industry recorded its first export slowdown in years, as external trade barriers and internal production challenges disrupted a sector long driven by strong global demand.
After several years of strong expansion, Bosnia and Herzegovina’s defense industry is showing its first clear signs of fatigue. Arms and ammunition exports, which had benefited from heightened global demand driven by geopolitical tensions and active conflicts, have entered a phase of stagnation and mild decline toward the end of the year.
According to official data from Bosnia and Herzegovina’s statistical authorities, total exports of weapons and ammunition during the first eleven months of the year reached approximately BAM 372 million, slightly below the level recorded in the same period last year. While the numerical decline is modest, the shift in trajectory is significant for a sector that had become one of the country’s strongest industrial performers.
A Two-Speed Year for the Industry
The year unfolded unevenly. During the first half, the defense sector continued its upward momentum, posting a sharp year-on-year increase in exports and reinforcing expectations that another record year was within reach. That optimism, however, proved short-lived.
From mid-summer onward, export volumes began to soften, culminating in particularly weak monthly results in the autumn. November stood out as one of the poorest months of the year, suggesting that the downturn cannot be attributed solely to normal fluctuations caused by contract timing or delivery schedules.
External Pressures Reshape Market Access
One of the most immediate external shocks came from changes in trade conditions with the United States. The introduction of significantly higher tariffs on arms and ammunition originating from Bosnia and Herzegovina directly affected producers that had relied heavily on the U.S. market. For years, American buyers absorbed a substantial share of Bosnian output, making the sector especially vulnerable to sudden policy shifts.
The loss of price competitiveness in such a key destination market forced manufacturers to reassess export strategies at a time when alternative markets were already highly competitive and politically sensitive.
Supply Chain Disruptions at Home
External pressure coincided with internal production challenges. Several manufacturers encountered difficulties securing critical raw materials, exposing long-standing vulnerabilities in supply chains.
The situation was most visible at Igman Konjic, the country’s largest ammunition producer, which was forced to temporarily halt production due to shortages of propellant. Although partial production later resumed, the disruption had an immediate impact on export volumes and delivery schedules.
Financial Strain and Governance Questions
Beyond operational issues, financial stress has also begun to surface across parts of the sector. Companies that once symbolized the revival of Bosnia and Herzegovina’s defense industry are now facing liquidity constraints, rising debt levels, and increased scrutiny of management practices.
In this context, Pretis has attracted particular attention, as concerns over financial sustainability and transparency have raised broader questions about governance standards within state-owned defense enterprises.
Investment Plans Offer a Potential Reset
Despite the weaker short-term outlook, the medium-term picture is not without positive signals. Authorities and company managements have announced major investment programs aimed at expanding capacity, modernizing production lines, and strengthening domestic supply chains.
Planned projects involve key players such as Unis Ginex, BNT-TMiH Novi Travnik, Pretis, and Binas. If implemented effectively, these investments could restore growth and improve resilience—but only with parallel reforms in management, procurement, and export diversification.
From Rapid Expansion to Industry Maturity
The current slowdown may mark the end of a phase characterized by rapid, demand-driven growth and the beginning of a more mature stage for Bosnia and Herzegovina’s defense industry. Global markets are becoming more selective, regulatory barriers more prominent, and geopolitical risks more complex.
Future performance will depend less on external demand alone and more on structural strength: secure access to raw materials, disciplined financial management, credible corporate governance, and diversified export markets. The recent decline in exports may be a warning—but also an opportunity to recalibrate an industry that has, until now, expanded faster than it has reformed.
