EIU Expect Divisions in Ruling Party to Deepen

Views on BG | September 10, 2002, Tuesday // 00:00

The analysts from the Economist Intelligence Unit forecast divisions within the ruling Simeon II National Movement to deepen further. This could force the government to come to an accommodation with other center-right groupings in order to stay in office in 2003. The report notes that key changes from last month included the criticism of the Movement for Rights and Freedom of some aspects of the government economic policy and, in particular, the privatization of Bulgartabac. This reinforces our view that tensions within the government are likely to come to a head towards the end of 2002 or in early 2003, EIU analysts conclude.

Real GDP growth will slow to three percent this year due to the decelerated growth in exports and gross fixed investment and decreased consumer spending, according to the revised forecast of EIU of Friday.

The analysts forecast that in 2003 growth will pick up to 3,7 percent, boosted by a gradual recovery in foreign demand. Inflation will fall in 2003 and the current-account deficit is forecast to shrink to the equivalent of 5,9 percent of GDP in 2002 and to 4,1 percent in 2003.

One of the arguments for revision of the forecast for Bulgarian export growth and for GDP growth is the weaker expected in EU in 2002 and 2003.
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