Bulgaria Expects Boost in Winter Tourism with Increased Foreign Visitors
Bulgaria is expecting a boost in winter tourism this year, with about 3.1 million foreign visitors projected between December and March
Coface Bulgaria has projected a steady expansion for Bulgaria’s economy, despite ongoing economic challenges in the European Union. During the IX Conference on Risk Management titled "Risks of Optimism," agency manager Plamen Dimitrov presented a sector report predicting a growth rate of 2% for this year, with an increase to approximately 2.8% anticipated in 2025.
However, the report also highlights significant difficulties that European economies face due to geopolitical tensions, particularly related to the war in Ukraine and rising hostilities between Israel and Iran. Dimitrov noted that the Purchasing Managers' Index (PMI) in Central and Eastern Europe remains below the crucial 50-point mark, indicating broader industrial concerns and a cautious sentiment among consumers and businesses regarding the economic outlook.
The real estate sector in Bulgaria is expected to see continued price increases, fueled by limited supply and a surge in investments linked to the gray economy. Dimitrov suggested that Bulgaria’s future adoption of the euro might help facilitate certain transactions in the property market.
Bruno de Moura Fernandes, Head of Macroeconomic Research at Coface Group, also addressed the conference, focusing on the current trends in commodity prices. He indicated a general stabilization of prices, with the exception of energy products, which have experienced notable volatility due to geopolitical disruptions. Specifically, the conflict in the Middle East raises concerns about global trade and the potential for Iran to obstruct passage through the Strait of Hormuz, which could lead to supply chain shortages.
Fernandes clarified that while such blockages would primarily impact shipments to China, they are unlikely to have long-lasting effects on global supply. He also noted that inflation in the euro area is projected to align with the European Central Bank's target of 2% by the second half of 2025, with US inflation expected to cool to about 3% during the same timeframe.
Coface's analysis points out that labor cost increases in the Eurozone, unlike in the US where they have stabilized due to a significant influx of migrants, are pushing inflation higher. Meanwhile, China is grappling with a housing bubble that has resulted in numerous vacant homes, as consumers are opting to save rather than spend. This decline in investments within the sector is anticipated to continue.
Currently, consumption accounts for approximately 40-45% of China's gross domestic product, but the trend of higher savings among consumers complicates efforts to stimulate growth. Fernández added that reduced purchases of high-value items, including homes and cars, are hindering domestic consumption and, consequently, economic growth.
The report also addresses issues within the Eurozone, particularly Germany's economic challenges, which are affecting the overall performance of the currency union. Higher energy prices have impacted German manufacturers, leading to cost-cutting measures, layoffs, and temporary halts in production. Although prices are becoming more stable, production recovery has been slow, posing a significant challenge to Germany's industrial model.
Fernandes cited Volkswagen's recent announcement regarding plans to close several assembly plants in Germany as an example of the struggles facing the industry. In contrast, companies in Spain are benefiting from lower energy costs and cheaper labor, positioning themselves advantageously against their German competitors.
For the Eurozone economy to regain momentum, an increase in consumer confidence is essential to stimulate spending. On the monetary policy front, Fernández indicated that easing will continue, while there is a need for stricter fiscal policies focused on reducing government debt and budget deficits, particularly in France.
Coface forecasts global GDP growth of 2.6% for both this year and next, despite geopolitical tensions and difficulties in China and Germany. The outcome of the upcoming US presidential election is deemed crucial for international trade and the economy, with uncertainties surrounding the potential implications of a second term for Donald Trump, who has previously threatened significant import tariffs.
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