The latest report of the Italian banking group Unicredit states that Bulgaria is inevitably going to undergo a two-year recession.

According to the report, cited by the Pari Daily, Unicredit, which is the owner of the Bulgarian Bulbank, expects that the Bulgarian economy will shrink by 3% and by 1% in 2010.

The Unicredit analysts also predict that Bulgaria will go from a 3% budget surplus to a deficit of 0,4% of the GDP in 2009, and of 1,5% of the GDP in 2010.

The inflation is predicted to go down to 3,5% in 2009, and 1,8% in 2010, which is believed to be one of the few positive effects of the shrinking economy.

The grave issues, however, are also predicted to include the decrease of foreign direct investments from 16,7% of the GDP to 7,5% of the GDP in 2009.

Bulgaria's unemployment is predicted to hit 10,2% by the end of 2009, and 12% in 2010.

Unicredit has degraded its prognoses for the whole region, which includes Bulgaria, Romania, Slovenia, Croatia, and Bosnia and Herzegovina.

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