OECD sees Bulgaria’s GDP growth slowing in 2023, recovering in 2024 and 2025

Bulgaria’s GDP growth is projected to slow to 1.7 per cent in 2023 before recovering to 2.8 per cent in 2024 and three per cent in 2025, the Organisation for Economic Cooperation and Development (OECD) said on November 29 in its latest economic outlook report.

The OECD said that low interest rates had fuelled a household credit boom, boosting private consumption, but this was easing.

The catch-up in the disbursement of EU funds is expected to contribute positively to investment in 2024 and beyond.

Inflation is high in 2023 but is expected to moderate during 2024.

The large, planned minimum wage increases in 2024 create risks of more persistent inflation, while changes in global energy prices could impact exports and inflation.

Interest rates are expected to continue to broadly follow euro area monetary policy given the fixed exchange rate regime of the Bulgarian lev to the euro.

The fiscal deficit is likely to widen if spending increases are not fully offset by higher tax collection.

Fiscal consolidation would help to manage demand in the economy and prepare for longer-run challenges.

Structural reforms are needed given the shrinking labour force and the need to encourage young people to stay in Bulgaria, the OECD said.

While some climate policies and targets are in place, the development of a comprehensive green transition roadmap is a priority, the report said.

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