EU spring economic forecast raises Bulgaria 2023 growth estimate to 1.5%

The European Commission’s spring forecast for the EU economy, released on May 15, projected Bulgaria’s economic growth this year at 1.5 per cent, up from the 1.4 per cent estimate in the winter forecast in February.

At the same time, the Commission made a downward adjustment for the 2024 projected growth to 2.4 per cent, compared to 2.5 per cent in February’s forecast.

The EC’s projection was below the growth target set in Bulgaria’s draft 2023 Budget, which estimated 1.8 per cent economic growth.

The Commission’s forecast said that it expected economic growth to stagnate after the first quarter and resume “robust expansion” next year, driven by export, private consumption and public investment.

Exports, in particular, were expected to “decelerate markedly” this year, before rebounding in 2024.

“Apart from the softening of external demand, export performance will be affected by the planned maintenances in the steel industry and in the [Kozloduy] nuclear power plant, as well as by the ban on the [Lukoil Neftochim] oil refinery’s exports of petroleum products processed from Russian crude oil,” the EC said.

At the same time, private consumption was expected to remain strong at the beginning of this year but “soften until mid-2024” before recovering, the EC said.

Regarding inflation, the EC said that it expected the harmonised consumer price inflation to “decelerate gradually” from an average of 13 per cent in 2022 to 9.4 per cent this year and 4.2 per cent in 2024.

“Energy prices are expected to decline in both 2023 and 2024, while food price inflation is forecast to persist at high levels in 2023 and abate in 2024. Services price inflation is, however, projected to accelerate in 2023 and remain relatively high in 2024,” the EC said.

The Commission’s forecast for the EU economy as a whole projected higher growth in 2023 at one per cent (compared to 0.8 per cent growth estimate in the winter forecast), followed by 1.7 per cent growth in 2024 (up from 1.6 per cent in the previous forecast.)

The EC said that the EU economy performed “better than expected” this past winter, owing to “lower energy prices, abating supply constraints, improved business confidence and a strong labour market.”

But core inflation at EU level was set to decline slower than previously projected and the balance of risks to the forecast was tilted to the downside, with the persistence of core inflation being a key risk, the Commission said.

In addition to the “persistent uncertainty stemming from Russia’s ongoing invasion of Ukraine,” the EU economy faced potential external risks, such as the recent banking sector turbulence, while “a surge in risk aversion in financial markets […] could prompt a more pronounced tightening of lending standards,” the EC said.

(Photo: Pedro Moura Pinheiro/

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The Sofia Globe staff

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