The International Monetary Fund (IMF) sees Bulgaria’s economy growing by 1.6 per cent this year, according to the latest estimates in its World Economic Outlook report, published on April 8. The figure is unchanged from the one forecast in January, following the IMF annual review of the country’s economy, known as the “article IV consultation”.
This puts Bulgaria’s projected economic growth in 2014 slightly above the estimate of the euro area, which the IMF increased slightly to 1.2 per cent.
Despite the end of the recession in the euro zone, the emerging and developing Europe region (which includes Bulgaria), as a whole, will see slightly weaker economic recovery in 2014, as “fragilities in the euro area, some domestic policy tightening, rising financial market volatility, and increased geopolitical risks stemming from developments in Ukraine pose appreciable downside risks,” the IMF said.
The World Economic Outlook report projections for Bulgaria in 2014 included 12.5 per cent unemployment (compared to 11.9 per cent following the article IV review) and a small current account deficit of 0.4 per cent (compared to 0.9 per cent in January).
The biggest change appears to be in IMF’s estimate for the average annual harmonised consumer price index figures, with the latest report forecasting 0.4 per cent deflation in 2014, compared to 0.8 per cent inflation in January.
Bulgaria is among several countries in Eastern Europe with falling core inflation, “reflecting a still-negative output gap, depressed domestic demand, weak bank credit, and negative external price developments, among other factors.”
The latest IMF projection comes only days after Bulgaria’s finance ministry increased the 2014 growth target from 1.8 per cent to 2.1 per cent, saying that it expected an increase in investment activity. The European Commission’s latest estimate, released in February, forecast 1.7 per cent growth in 2014 for Bulgaria.
(Photo: Alessandro Paiva/sxc.hu)