EU autumn economic forecast raises Bulgaria 2024 growth forecast to 2.4%

The European Commission’s autumn forecast for the EU economy, released on November 15, projected Bulgaria’s economic growth this year at 2.4 per cent, up from its 1.9 per cent estimate in the spring forecast in May.

At the same time, the Commission re-affirmed its economic growth estimate for 2025 at 2.9 per cent and projected three per cent growth in 2026.

The EC’s latest economic growth forecast for this year is still below the 3.2 per cent growth target set in Bulgaria’s 2024 Budget.

The Commission’s earlier report had expected slower growth at the start of this year, citing shrinking exports and slower private consumption growth. However, the autumn forecast said that private consumption grew by 4.8 per cent year-on-year in the first half of the year “on the back of strong wage increases amid a tight labour market and falling consumer price inflation,” and bank lending to households also “intensified” this year.

The Commission projected that the pace consumption growth would slow down as wage growth declines and saving rates go up. Stronger investment growth is expected to pick up the slack, supported by EU funds under the Recovery and Resilience Facility.

Regarding inflation, the EC said that the decline in the harmonised consumer price inflation had run its course and inflation was expected to remain relatively constant, at 2.5 per cent in 2024 and 2.3 per cent in 2025.

The Commission said that the EU economy grew at a steady, if subdued, pace in the second and third quarters, projecting 0.8 per cent growth for the euro zone in 2024 and 0.9 per cent for the EU economy as a whole.

In 2025, growth was forecast to speed up to 1.3 per cent in the euro zone and 1.5 per cent in the EU as a whole, down 0.1 percentage points compared with the spring forecast for both figures.

“Growth in the EU is gradually picking up, thanks to falling inflation, record-low unemployment and recovering consumption and investment. Yet, structural challenges and geopolitical risks loom. Strengthening our competitiveness and security will be essential to boost potential growth and navigate global uncertainties,” EU commissioner for economy Paolo Gentiloni said.

The autumn forecast said that the EU’s economic outlook remained highly uncertain, with risks largely tilted to the downside. Among the risks, it listed Russia’s protracted war of aggression against Ukraine and the intensified conflict in the Middle East as the sources of continued vulnerability of European energy security.

Although it did not specifically name potential policy changes by a Trump administration in the US, the forecast noted that “a further increase in protectionist measures by trading partners could weigh on global trade, with negative impact on the EU’s highly open economy.”

(Photo: Pedro Moura Pinheiro/flickr.com)

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