The European Commission’s winter forecast for the EU economy, released on February 7, estimated that Bulgaria’s economy would continue growing strongly in 2018, but lowered the growth estimate by 0.1 percentage points compared to last year’s autumn forecast, to 3.7 per cent.
The same 0.1 percentage points adjustment was applied to the 2017 estimate – to 3.8 per cent (Bulgaria will report preliminary gross domestic product data for last year in March) – and the 2019 estimate (down to 3.5 per cent.)
Bulgaria’s economic growth remained strong, driven by both consumption – fuelled by wage increases in the public sector and tighter labour market conditions in the private sector – and investment, especially in the public sector, thanks to the implementation of EU-backed investment programmes, which supported government spending, the Commission said.
The main engine of growth this year and in 2019 will continue to be strong domestic demand, while the trade balance, which showed a surplus in 2016 before turning to deficit last year, is expected to turn positive again in 2019. Both investment and private consumption were expected to remain the main drivers of growth in 2019.
Inflation, which had been negative for three years, was 1.2 per cent in 2017 and is expected to increase marginally to 1.4 per cent in 2018 and 1.5 per cent in 2019. This is mainly due to the global oil prices, which are assumed to continue pushing upwards energy prices, but at a declining rate, the EC said.
For the EU as a whole and the euro zone, the Commission raised its 2017 estimates to 2.4 per cent, the fastest economic growth pace recorded in the decade since the global financial crisis. In the 2017 autumn forecast, the EC estimated euro zone growth at 2.2 per cent and the EU28 at 2.3 per cent.
The growth forecasts for 2018 and 2019 have also been raised since November for both the euro area and EU economies: from 2.1 per cent to 2.3 per cent for this year and from 1.9 per cent to two per cent for 2019.
“Europe’s economy has entered 2018 in robust health. The euro area is enjoying growth rates not seen since before the financial crisis. Unemployment and deficits continue to fall and investment is at last rising in a meaningful way,” economic and financial affairs commissioner Pierre Moscovici said in a statement.
“Economic growth is also more balanced than it was a decade ago – and provided we pursue smart structural reforms and responsible fiscal policies – it can also be more durable. This window of opportunity to reform will not remain open forever: the moment to take the necessary ambitious decisions to strengthen the Economic and Monetary Union is now,” he said.
The risks to the outlook were broadly balanced, the EC said: “Downside risks related to the uncertain outcome of the Brexit negotiations remain, as do those associated with geopolitical tensions and a shift towards more inward looking and protectionist policies.”
(Photo: Steve Ford/sxc.hu)