The International Monetary Fund (IMF) expects Bulgaria’s economy to grow by 3.2 per cent this year before accelerating to 4.5 per cent in 2023, according to its latest World Economic Outlook report.
IMF’s economic growth estimate for 2022 is significantly lower than what it forecast in last year’s World Economic Outlook report, which projected 4.4 per cent growth.
It also forecast 4.4 per cent growth in 2021, but the current estimate is that Bulgaria’s economy grew by 4.2 per cent last year.
Overall, the report forecast the global economy would grow by 3.6 per cent in 2022, compared to 4.4 per cent growth forecast in the April 2021 World Economic Outlook report. The projection for 2023 is also 3.6 per cent growth.
The main reason for the worsened global economic prospects was Russia’s invasion of Ukraine and “the sanctions aimed at pressuring Russia to end hostilities,” the report said.
“This crisis unfolds while the global economy was on a mending path but had not yet fully recovered from the COVID-19 pandemic, with a significant divergence between the economic recoveries of advanced economies and emerging market and developing ones,” the IMF said.
The economy in IMF’s emerging and developing Europe region, which includes Bulgaria, is expected to shrink by 2.9 per cent, due to a projected 8.5 per cent contraction of Russia’s economy and a 35 per cent decline in Ukraine’s economy forecast by the IMF.
“The economic effects of the war are spreading far and wide—like seismic waves that emanate from the epicenter of an earthquake—mainly through commodity markets, trade, and financial linkages,” according to the report.
The IMF noted that Russia is a major supplier of oil, gas, and metals, and, together with Ukraine, of wheat and corn. “The current and anticipated decline in the supply of these commodities has already driven their prices up sharply,” the Fund said.
“Because of the unprecedented nature of the shock, we highlight that the uncertainty around these projections is considerable, well-beyond the usual range. Growth could slow significantly more while inflation could turn out higher than expected if, for instance, sanctions aimed at ending the war extend to an even broader volume of Russian energy and other exports,” the report said.
(Photo: Bruno Sanchez-Andrade)
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