EC Raises Expectations for Bulgaria’s Economy
According to the European Commission’s forecast for Bulgaria’s economic growth, the country’s economy will continue to grow steadily, with a 3.8% expected growth of its gross domestic product. The EC’s forecast from February was for a growth of 3.7%, but the expectations were improved in the spring macroeconomic forecast. The growth is expected to be mainly driven by the domestic demand and the inflation is seen to continue to grow as a result of the strong private demand. The forecast has also been improved due to the positive trends in the labor market, namely the wage increase and the employment growth. Public finances are expected to remain stable, supported by the favorable macroeconomic environment and despite the increase in public investments and wages.
Brussels expects that the strong domestic consumption, the increased purchasing power of the households and the higher electricity prices will fuel inflation. In 2017 inflation was 1.2% and it is expected to reach 1.8% in 2018.
According to the report, employment in Bulgaria is returning to its pre-crisis levels, reaching 64.3% in 2017. The unemployment rate this year is expected to be about 5.5%, and to further drop to 5.3% in 2019.
The full text of the EC’s spring forecast is published here.
Meanwhile, in mid-May, the NSI published its express estimates for the country’s gross domestic product for the first quarter of 2018. According to the estimates, the economy is growing slower than the CEE countries, but is still among the accelerating economies, given the general slowdown in Europe. For the period January-March Bulgaria’s GDP rose by 3.5% compared to the corresponding quarter a year ago and by 0.8% compared to the fourth quarter of 2017. The reported increase is above the average 2.5% for Europe.
In nominal terms, the GDP for the three-month period reached BGN 21.241 million and the realized added value was BGN 18.484 million. Domestic consumption accounted for the largest share (85.5%), but its growth is generally slowing down, offset by growth in investments. The increase in investments was mainly due to public spending and growth in construction. For the period January-March, the sector also attracted most of the free labor force, as those employed in construction grew by 22.3 thousand, compared to the corresponding period a year ago.
The highest economic growth in the EU was registered in the CEE region: Latvia – 5.2%, Poland – 4.9%, Hungary – 4.7%, the Czech Republic – 4.5% and Romania – 4.2%. By contrast, the two biggest economies in Europe recorded a slowdown – both France and Germany had a growth of 0.3% compared to the previous quarter. Data is available for 20 EU Member states, and a decrease in the growth pace was observed in 13 of them.
Detailed data for January-March 2018 can be found here:
