EU winter economic forecast for Bulgaria sees growth increasing to 3.6% in 2019
Bulgaria’s real GDP growth is expected to increase to 3.6 per cent in 2019 and remain at 3.6 per cent in 2020, according to the European Commission’s winter economic forecast, released on February 7.
Real GDP growth lost momentum in 2018, when Bulgaria’s economy grew at an estimated rate of 3.2 per cent compared to 3.8 per cent in the previous year, the Commission said.
The main driver of this slowdown was the weakening of exports due to softer external demand from large trading partners in the EU and Turkey, as well as some country-specific oneoff events.
Trends in the domestic economy, by contrast, were more positive. Wage increases continued to fuel private consumption growth and the recovery in the use of EU investment funding provided a boost to investment growth, the Commission said.
Survey data point to increasing orders and higher output, which suggests that GDP growth should recover in the coming quarters.
Domestic demand was the main engine of growth in 2018 and is expected to remain so in 2019 and 2020.
“Labour market tightening and additional public sector wage increases should provide continued support for private consumption in 2019,” the Commission said.
“Private and public investment are also expected to remain strong, thanks to the low interest rate environment and EU funding.”
Overall, real GDP growth is expected to increase to 3.6 per cent in 2019 and remain at 3.6 per cent in 2020.
The current growth pattern suggests a relatively small impact from external shocks and exports are expected to stage a moderate recovery.
“Risks to the economic outlook are tilted to the downside and mainly stem from the possibility of weaker demand in major export markets.”
Price pressures increased in 2018, the Commission said.
Overall, headline inflation reached 2.6 per cent in 2018. This is due to the rise in energy prices, while strong domestic demand and increases in unprocessed food prices, due to disappointing harvest, added to inflationary pressures.
Despite the support of strong demand and high wage growth, inflation is expected to fall to two per cent in 2019, mainly as a result of base effects, and then ease further to 1.8 per cent in 2020, the European Commission said.
(Photo: Clive Leviev-Sawyer)
