Bulgaria to Stay in Recession in 2010 - Think-Tank

Bulgaria’s economy will continue to contract in the second half of this year and will fail to return to growth next year, a report by a local think-tank shows.

Bulgaria, the European Union’s poorest country, is currently going through its first recession in 12 years after a three-year lending boom stalled and foreign investment dried up.

Gross domestic product may drop 6% in the third quarter of this year, 5% in the fourth quarter and slightly grow in the second or third quarter of next year, the Center for Economic Development (CED) said in an analysis, entitled “Bulgaria's economy – October 2009”.

FDI inflows in the country in 2010 are expected to fall sharply to their lowest levels over the last few years, totaling no more than EUR 2,5-3 B, down from EUR 3.5-4 B this year.

Inflation for this year is expected to stay below 1%, while the jobless rate is said to reach its peak in the winter of 2009-2010, surging as high as 9-9,5%.

The Bulgarian government’s most recent estimate was for a 6.3% decline in 2009 and 2% next year. The International Monetary Fund expects GDP to fall 6.5% this year and 2.5% next year. EBRD forecasts GDP to fall by 1.5%, following a 6% drop this year.