Inflation according to the harmonized index of consumer prices in Bulgaria will fall from 13 percent in 2022 to 7.8 percent in 2023 due to lower energy prices - this is according to the data of the winter economic forecast of the European Commission for this year. Next year, overall inflation will drop to 4 percent due to the expected decline in food price dynamics.

However, the Commission warns that inflation in the prices of services will be sustainable within the forecast period. Real gross domestic product will increase by 1.4 percent this year and 2.5 percent next year.

The development of the economy will largely depend on the interaction between wages and price developments. In the context of a tight labor market, wages will continue to grow strongly and support household consumption, the forecast added.

The rapid growth in exports last year was spurred by the opportunity to meet shortages of food, metal and other material products caused by Russia's war of aggression in Ukraine.

However, export growth is expected to slow significantly this year due to severely depleted export market share opportunities. In 2024, however, it will grow in sync with external demand.

The increased absorption of European funds, more precisely under the recovery and sustainability plan, will support general investments for this and next year. However, a possible postponement of its application puts investment growth at risk.

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/BNR