EU winter economic forecast lowers Bulgaria 2022 growth estimate to 3.7%

The European Commission said in its winter economic forecast on February 10 that it expected Bulgaria’s economy to grow by 3.7 per cent this year, lower than its earlier estimate of 4.1 per cent in the autumn forecast.

At the same time, the Commission raised its economic growth projection for 2021 to four per cent (from 3.8 per cent) and the estimate for 2023 to 3.9 per cent (from 3.5 per cent).

Bulgaria is set to issue a gross domestic product flash estimate for 2021 next week and release preliminary GDP figures in the first week of March.

The EC attributed the economic rebound in 2021 to the increase in private consumption and the exports of goods and services, but noted that “investment underperformed […] held back by persistently high uncertainty with regard to the COVID-19 pandemic situation, the introduction of containment measures and the external environment.”

Despite the accelerated inflation, caused by high energy prices and related indirect effects, the EC said that it forecast economic growth to remain strong in 2022 and 2023, with spending funded under the EU Recovery and Resilience Facility (RRF) expected to stimulate exports and domestic demand.

However, the EC winter forecast also cautioned that higher energy and food prices – the report projected 6.3 per cent and 3.9 per cent headline inflation in 2022 and 2023, respectively – could erode the purchasing power of low-income households in the absence of additional compensations.

Bulgaria’s projected growth figures matched the outlook for the EU as a whole, as the Commission raised its growth estimate for 2021 to 5.3 per cent (up from five per cent in the autumn report), but reduced the 2022 forecast to four per cent (from 4.3 per cent).

The EC said that it expected growth to moderate further to 2.8 per cent in 2023 in the EU27, a figure still higher than the 2.5 per cent forecast in the autumn report.

Even though the impact of the coronavirus pandemic on economic activity has weakened, ongoing containment measures and protracted staff shortages could drag on economic activity, the EC said, but noted that weaker demand growth in the near-term could “help to resolve supply bottlenecks somewhat earlier than assumed.”

On the upside, household demand could grow more strongly than expected, as already experienced with the reopening of economies in 2020, and investments fostered by the RRF could generate a stronger impulse to activity, the Commission said.

“Risks to the growth and inflation outlook are markedly aggravated by geopolitical tensions in Eastern Europe,” according to the report.

(Photo: Steve Ford/

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