The International Monetary Fund (IMF) expects Bulgaria’s economy to grow by 3.6 per cent in 2018, same as last year, before slowing down to 3.1 per cent in 2019.
The forecast, made in IMF’s world economic outlook report released on October 9, did not specify the reason for such a sharp drop-off, but was in line IMF’s expectations for emerging and developing countries in Europe.
Growth in this group of countries was expected to drop from six per cent in 2017 to 3.8 per cent this year and two per cent in 2019.
Advanced European countries were also expected to see slower growth this year, at two per cent, compared to 2.4 per cent in 2017, falling further down to 1.9 per cent in 2019. The euro zone’s forecast was identical – two per cent growth this year, followed by 1.9 per cent in 2019.
Overall, the IMF said that it expected the world economic growth to remain steady this year and in 2019, at the 3.7 per cent level recorded last year, despite growing risks on the downside.
It cut its world forecast down by 0.2 percentage points compared to the previous world economic outlook report issued in April, as several of the risks highlighted at that time, such as rising trade barriers and a reversal of capital flows to emerging market economies with weaker fundamentals and higher political risk, have become more pronounced or have partially materialised, IMF said.
“Global financial conditions are expected to tighten as monetary policy normalizes; the trade measures implemented since April will weigh on activity in 2019 and beyond; US fiscal policy will subtract momentum starting in 2020; and China will slow, reflecting weaker credit growth and rising trade barriers,” the report said.
The escalating trade tensions, in particular, and the potential shift away from a “multilateral, rules-based trading system” were the key threats to the global outlook, according to the IMF.
Protectionist rhetoric has already resulted in US tariffs on Chinese goods and further tensions “could dent business and financial market sentiment, trigger financial market volatility, and slow investment and trade,” said the report, noting that “higher trade barriers would disrupt global supply chains and slow the spread of new technologies, ultimately lowering global productivity and welfare.”
(Photo: Piotr Lewandowski)