A recent report by Allianz Trade paints a bleak picture for Bulgaria's labor market, predicting a one-third decrease in the working-age population by the year 2050
World Bank: Bulgaria's Economy will slow down due to War, Inflation and COVID-19
Almost a third slower - compared to the forecast from January - will be the growth of the Bulgarian economy in 2022 due to the war in Ukraine and the risks of prolonged military conflict, point to further adjustments to downward growth. Instead of 3.8% of GDP, the new expectations are for 2.6%, i.e. adjustment for growth contraction of 1.2 percentage points.
The forecast is from the World Bank in its spring report, released a week before the joint meetings with the International Monetary Fund scheduled for the end of the week.
Another risk that the bank points out is the return of COVID-19 waves due to the low level of vaccination in the country.
Inflation, which is a global problem and reached 10% in Bulgaria in January, will continue to shrink the purchasing power of Bulgarians and increase poverty at least until the middle of the year. Expectations for 2022 are for annual inflation of consumer goods of 9.3%, which is almost three times more than 3.3% from 2021 and incomparably higher than 1.7% in 2020. There will be serious pressure on the government to compensate for the damage from the war and inflation with fiscal measures, which means an additional outflow of funds into the economy with inflationary consequences.
Delays in the Recovery and Sustainability Plan and operational programs under the EU budget for 2021-2027 will also reduce economic growth because they have limited the government's intentions to significantly increase public investment in 2022.
Overall, in the medium term, growth is likely to be driven by two factors: public investment in EU funds and improved business expectations due to Bulgaria's impending entry into the Eurozone. Net foreign direct investment in Bulgaria will continue to decline over the next three years by an average of 1.7% per year.
An adjustment to the budget approved at the end of February is already expected in the summer, and the World Bank believes that the conservative fiscal policy of the Bulgarian government over the past two decades is over, at least for now. The fiscal deficit is likely to exceed 4.1% of GDP, projected for optimistic economic growth of 4.8% even before Russia invades Ukraine.
Expected main driving factors for economic growth in Bulgaria
The report notes as a positive moment the formation of a government after the political crisis that lasted almost throughout 2021. “There are high expectations that the cabinet will undertake structural reforms in a number of areas, including the administration of justice and the control of corruption,” reads the section on Bulgaria.
The expectations for 2023 - with the stipulation that the war causes rapid corrections of all forecasts, and mostly in a negative way - is for the growth of the Bulgarian economy by 4.3%. For 2024, when the country is expected to become a member of the Eurozone, the forecast is for growth of 3.7%.
Write to us at email@example.com
Информирайте се на Български - Novinite.bg
We need your support so Novinite.com can keep delivering news and information about Bulgaria! Thank you!
Speaking at a briefing following a meeting with Croatian Central Bank Governor Boris Vujcic, Bulgarian National Bank (BNB) Governor Dimitar Radev highlighted the significant costs associated with delaying entry into the eurozone
Head of Croatia's Central Bank Visits Bulgaria: The Transition To The Euro Did Not Result In Price Hikes
During his visit to Bulgaria, Croatian Central Bank Governor Boris Vujcic reassured that Croatia's transition to the euro did not result in a significant uptick in prices
Eurozone Accession on Horizon: Bulgaria's Finance Minister Optimistic Despite Government Rotation Talks
As Bulgaria sets its sights on joining the Eurozone by 2025, Finance Minister Asen Vassilev remains resolute in his commitment, despite ongoing uncertainties surrounding the government's rotation
In a significant step towards Eurozone integration, Bulgaria asserts its readiness to join the currency union without relying on exceptions
The Bulgarian Ministry of Finance has unveiled plans to consolidate the National Revenue Agency and the Customs Agency into a single entity, marking a significant step towards streamlining financial operations in the country
At the end of 2023, household expenses increased by 19.1%, with the majority spent on food - approximately one-third of all expenditures. This is indicated by the data from the National Statistical Institute (NSI).