The European Commission said in its February 10 winter economic forecast that it expects Bulgaria’s economy to grow 3.7% this year, down from its previous estimate of 4.1% in the forecast. of autumn.
At the same time, the Commission raised its economic growth projection for 2021 to 4% (from 3.8%) and its estimate for 2023 to 3.9% (from 3.5%).
Bulgaria is expected to release a flash estimate of gross domestic product for 2021 next week and release preliminary GDP figures in the first week of March.
The EC attributed the 2021 economic rebound to increased private consumption and exports of goods and services, but noted that “investment underperformed […] held back by continued high uncertainty regarding the COVID-19 pandemic situation, the implementation of containment measures and the external environment.
Despite accelerating inflation, caused by high energy prices and related indirect effects, the EC said it expected economic growth to remain strong in 2022 and 2023, spending financed under the EU Recovery and Resilience Facility (RRF) to boost exports and domestic production. request.
However, the EC winter forecast also warned that rising energy and food prices – the report predicted headline inflation of 6.3% and 3.9% in 2022 and 2023, respectively – could erode the purchasing power of low-income households in the absence of additional compensation. .
The forecast growth figures for Bulgaria matched the outlook for the EU as a whole, as the Commission raised its growth estimate for 2021 to 5.3% (from 5% in the autumn report), but reduced forecasts for 2022 at 4% (from 4.3 percent).
The EC said it expected growth to slow further to 2.8% in 2023 in the EU27, still above the 2.5% forecast in the autumn report.
Even though the impact of the coronavirus pandemic on economic activity has weakened, ongoing containment measures and prolonged staff shortages could dampen economic activity, the EC said, but noted that a Weaker near-term demand growth could “help address supply bottlenecks somewhat.” earlier than expected.
On the upside, household demand could grow stronger than expected, as has already been the case with the reopening of economies in 2020, and investments encouraged by the RRF could generate a stronger boost to activity, said the Commission.
“Risks to the outlook for growth and inflation are significantly heightened by geopolitical tensions in Eastern Europe,” the report said.
(Photo: Steve Ford/sxc.hu)
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