The World Bank expects economic growth in Bulgaria to reach 2.9 per cent this year but slow down to 2.2 per cent in 2016, according to forecasts published in the twice-annual EU Economic Report.
Both figures are well above the EU’s most recent forecasts for Bulgaria, which estimated growth at 1.9 per cent this year and forecast a 1.6 per cent increase in 2016, in a report published last month. For its part, the macroeconomic framework of Bulgaria’s 2016 Budget envisioned economic growth at 2.1 per cent, while also raising this year’s estimate to two per cent, following stronger-than-expected economic data in the first half of the year.
The World Bank concurred, saying that growth in 2015 is likely to be higher than initially expected, supported by strong exports to the EU in the first half of 2015, the recovery of investments, mainly public ones from improved implementation of EU-funded projects, and better labour market performance.
Bulgaria’s government was likely to achieve its goal of fiscal consolidation, reducing the Budget deficit for this year to 2.8 per cent of gross domestic product (GDP), compared to 5.8 per cent in 2014, but deflation remained an issue, with the annual consumer price index rates having been negative since July 2013, the report said.
The reduction of poverty is a particular focus of this World Bank report, which noted that “given the modest pace of [Bulgaria’s] recovery, poverty – measured at $5 per day in PPP terms – is expected to remain above pre-2008 levels and decline slowly to 14.1 percent in 2016.”
During the global economic crisis, cuts in social spending resulted in lower coverage of the poorest quintile. In Bulgaria’s case, even though overall social assistance expenditures increased between 2004 and 2012, the spending on the guaranteed minimum income program, which mitigates poverty among the extreme poor, in 2012 was just 40 percent of expenditure in 2004.
(Photo: Michael Faes/sxc.hu)