The European Commission’s summer forecast for the EU economy, released on July 14, raised the estimate for Bulgaria’s economic growth this year to 2.8 per cent, but lowered its projection for 2023 to 2.3 per cent.
In its previous spring forecast, the Commission had estimated 2.1 per cent gross domestic product (GDP) growth in 2022 and 3.1 per cent in 2023.
“The upward revision in 2022 reflects mainly the strong recovery in the first quarter of this year. The weaker external environment and tighter lending conditions, combined with the weaker real wage growth, explain the downward revision for 2023,” the EC said.
The Commission said that Bulgaria’s 0.8 per cent economic growth in the first quarter was due to favourable labour market conditions and the sharp increase in wages in the private sector in the beginning of the year.
“Consumer confidence has deteriorated starting in March 2022, suggesting lower private consumption growth for the rest of the year,” the forecast said.
“The strong wage increase in 2022 is set to lead to further price increases, particularly in the non-tradeable sector,” the Commission said.
Bulgaria’s harmonised consumer price index, the figure used to compare inflation with the EU average, was projected to increase by 12.5 per cent in 2022, owing to higher energy and food prices, as well as the indirect effects of increased energy prices on other sectors of the economy.
“Russia’s unprovoked invasion of Ukraine continues to send shockwaves through the global economy. Moscow’s actions are disrupting energy and grain supplies, pushing up prices and weakening confidence,” European economy commissioner Paolo Gentiloni said in a statement.
“In Europe, momentum from the reopening of our economies is set to prop up annual growth in 2022, but for 2023 we have markedly revised down our forecast. Record-high inflation is now expected to peak later this year and gradually decline in 2023.
“With the course of the war and the reliability of gas supplies unknown, this forecast is subject to high uncertainty and downside risks,” he said.
(Photo: Steve Ford/sxc.hu)
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