The European Commission’s autumn forecast for the EU economy, released on November 15, projected Bulgaria’s economic growth this year at two per cent, up from the 1.5 per cent estimate in the spring forecast in May.
At the same time, the Commission made a downward adjustment for the 2024 projected growth to 1.8 per cent, compared to 2.4 per cent in May’s forecast.
The EC’s projection was above the growth target set in Bulgaria’s 2023 Budget, which estimated 1.8 per cent economic growth.
The Commission’s forecast said that household spending was set to stagnate “towards the end of 2023 and the beginning of 2024,” due to a projected increase in retail interest rates for households, resulting in a slower increase in public consumption.
Economic growth is expected to speed up and reach 2.6 per cent in 2025, the Commission’s forecast said.
Regarding inflation, the EC said that it expected the harmonised consumer price inflation to continue on its current downward trend, albeit “less sharply”, and hit an annual average of 8.8 per cent in 2023 (compared to 9.4 per cent in the spring forecast).
The EC forecast an annual average inflation of four per cent in 2024 and 2.9 per cent in 2025.
General government deficit was projected to rise slightly to three per cent of gross domestic product this year and remain unchanged in 2024, but the EC expected it to rise to 3.2 per cent of GDP in 2025, due to “the delivery of military equipment with a total temporary cost close to 0.7 per cent of GDP.”
The Commission’s forecast for the EU economy as a whole projected lower growth in 2023 at 0.6 per cent (compared to a one per cent growth estimate in the spring forecast), followed by 1.3 per cent growth in 2024 (down from 1.7 per cent in spring) and 1.7 per cent in 2025.
The EC said that the EU economy has lost momentum after “a robust post-pandemic expansion in 2021 and 2022”, as the high cost of living “took a heavier toll than expected” and global trade provided “little support.”
“The loss of growth momentum so far this year has been underpinned by the lack of a solid growth driver, with weakness especially in consumption but also on the external side,” the EC said.
Uncertainty and downside risks to the economic outlook have increased in recent months, the Commission said, listing the evolution of Russia’s ongoing war against Ukraine and the conflict in the Middle East, as well as economic developments in China among major risks.
But it also highlighted the risks posed by climate change. “Natural hazards like heatwaves, fires, droughts and floods, which have been raging across the continent with increasing frequency and scope, illustrate the dramatic consequences that climate change can have for the environment and the people affected, but also for the economy,” the EC said.
(Photo: Pedro Moura Pinheiro/flickr.com)
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