World Bank: Bulgaria’s economy to slow down substantially in 2023

The World Bank is projecting 1.4 per cent economic growth in Bulgaria in 2023, a reduction of 0.1 percentage points compared with its forecast in June, according to the Bank’s Europe and Central Asia Economic Update, released on October 25.

The update forecasts 2.7 per cent economic growth in Bulgaria in 2024, a reduction of 0.1 per cent compared with the World Bank’s forecast in June.

Following robust growth in 2022, the Bulgarian economy is set to slow down in line with EU trends, the World Bank said.

Inflation remains elevated, threatening plans for euro adoption in 2025, the report said.

The fiscal deficit is expected to remain below the three per cent Maastricht ceiling, possibly at the expense of reduced public investment.

A new regular government is hoped to step up reform momentum, the World Bank said.

It said that poverty reduction is expected to slow down as Bulgaria faces slower growth and elevated inflation.

Energy affordability remains a pressing concern.

Growth may be further suppressed if Bulgaria fails to deliver on the reform milestones under the National Recovery and Resilience Plan (NRRP), resulting in further delays of upcoming tranches, the World Bank said.

Political risks have declined markedly following the formation of a regular coalition government in June 2023, the report said.

The new government’s priorities include speeding up the implementation of the NRRP, as well as preparing the country for near-term Schengen Area and euro zone accession.

“Yet, the upcoming local elections in October may increase pressure on the ruling coalition, and political uncertainty may re-escalate,” the report said.

(Photo of the World Bank building in Washington DC: Things)

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