Bulgarian economy set to grow strongly in a slowing down region – World Bank
Despite potential economic growth in Europe and Central Asia region declining in recent years, Bulgaria’s economy was set to continue expanding strongly in the medium term, according to the latest World Bank’s Global Economic Prospects report, released on January 9.
The World Bank’s forecast for Bulgarian economy estimated growth of 3.9 per cent in 2018, just a notch above the 3.8 per cent estimate for last year, followed by four per cent in 2019 and 3.9 per cent in 2020. The figures for 2018 and 2019 were both 0.7 percentage points higher than the projections in the June 2017 forecast.
For the region as a whole, the World Bank said that growth was expected to moderate to 2.9 per cent in 2018, from 3.8 per cent in 2017, and then stabilise at three per cent in 2019 and 2020.
“The forecast is predicated on a modest recovery in commodity prices, a gradual moderation of growth in the euro area following a strong cyclical pickup in 2017-18, an orderly tightening of global financing conditions, and the absence of new geopolitical tensions,” the report said.
Economies in the western part of the Europe and Central Asia region were projected to slow in line with the maturing recovery in the euro area, particularly in Central Europe, where growth was projected to decelerate from 4.7 per cent in 2017 to 3.2 per cent in 2020, with Hungary, Poland and Romania’s economies slowing down.
The risks to growth in the region have become more balanced but continue to be tilted to the downside, the World Bank said.
“On the upside, a more favourable external environment than assumed, including faster-than-expected growth in the EU – the largest trading partner and financing source for Europe and Central Asia countries – as well as other major economies, could benefit growth in the region. Acceleration in structural reforms could also boost growth by more than is projected,” the report said.
“However, downside risks remain significant. A disorderly tightening of global financing conditions could raise financing costs and suppress capital inflows and growth. Lower than projected oil prices could adversely affect oil exporters, undermining their still-fragile recoveries and spilling over into smaller neighbouring countries through trade and financial channels.
“An escalation of geopolitical tensions in Ukraine, a tightening of international sanctions on Russia, or an intensification of disagreements of some countries with the EU could deter international investors. The latter could lead to expectations of an end to EU accession protocol for Turkey and of disruptions in EU funding to some countries during the next budget cycle,” the report said.
(Photo of the World Bank headquarters: Shiny Things/flickr.com)