EBRD slightly lowers economic growth forecasts for Bulgaria
Real GDP growth in Bulgaria is expected to reach 2.2 per cent in 2024, the European Bank for Reconstruction and Development (EBRD) said in its Regional Economic Prospects report for September 2024, released on September 26.
This is 0.4 percentage points lower than the EBRD’s forecast for Bulgaria for 2024, released in May.
The EBRD forecast 2.9 per cent economic growth for Bulgaria in 2025, a reduction of 0.1 percentage points compared with the figure in the May report.
The EBRD said that after slowing to 1.8 per cent in 2023, GDP growth in Bulgaria reached 2.1 per cent in year on year in the first half of 2024, driven by domestic demand.
Real wage growth averaged 14 per cent in the first semester, driven by a 20 per cent minimum wage increase, which translated into resilient private consumption.
Growing incomes, lack of investment opportunities and low interest costs led to strong investment in construction, especially in the capital, Sofia.
This is reflected in the structure of loans, as households increasingly take on mortgage loans motivated by low interest rates and euro adoption expectations.
Meanwhile, inflation has stabilised at around 2.8 per cent. On the downside, weak foreign demand translated into sluggish industrial output growth, the EBRD said.
The fiscal policy stance has been slightly expansionary, with a targeted deficit of 3 per cent of GDP in 2024.
“GDP is expected to expand by 2.2 per cent in 2024 as export demand will likely remain weak,” the EBRD said.
“Heading into 2025, the economy is forecast to grow by 2.9 per cent, albeit with downside risks related to the political situation and delays in EU funds absorption,” the report said.
(Photo: Clive Leviev-Sawyer)
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