The World Bank expects Bulgaria’s economy to grow by 3.8 per cent in 2017, thanks to robust domestic demand that compensated for the diminishing contribution of net exports.
The forecast, made in the migration and mobility report for Europe and Central Asia, is big bump compared to the global economic prospects report in June, which put Bulgaria’s economic growth at three per cent this year.
“Strong consumption and, increasingly, investment are likely to be the key driver in the medium term. Export growth is likely to remain robust, albeit slowing down somewhat in line with expected deceleration of economic activity in the euro zone compared to 2017,” the World Bank said.
The current forecast also envisions economic growth of 3.9 per cent in 2018 and four per cent in 2019, up from the June report, which estimated growth at 3.2 per cent in 2018 and 3.3 per cent in 2019.
“The external current account is expected to continue to be in surplus, although declining by 2019. Export growth is projected to be robust, in line with Bulgaria’s improved competitiveness in EU markets and higher commodity prices. Import growth is expected to be driven by higher oil prices and strengthening domestic demand for consumer and investment goods,” the report said.
Going forward, Bulgaria’s key challenge remained the acceleration of convergence with the rest of the EU, which required improvements in productivity of at least four per cent a year in order to reach the average EU income levels within a generation.
“This compares with annual average productivity growth of 2.5 per cent a year over the last six years while improvements in labour force participation were constrained by skill shortages. […] Enhancing productivity growth would require addressing governance challenges – public administration, judiciary, governance of state-owned enterprises – that have undermined Bulgaria’s structural transformation,” the World Bank said.
(Photo of the World Bank headquarters: Shiny Things/flickr.com)