EC: Bulgaria's Economy to Grow by 2.3% in 2012

Business » FINANCE | November 10, 2011, Thursday // 12:02
Bulgaria: EC: Bulgaria's Economy to Grow by 2.3% in 2012 Olli Rehn, the Monetary Affairs European Commissioner gives the EU Autumn Economic Forecast 2011-12 during a news conference at the EU commissionl headquarters in Brussels, Belgium, 10 November 2011. EPA/BGNES

Bulgaria's economy will register a growth of 2.3 in 2012, according to the Fall Economic Forecast of the European Commission unveiled Thursday.

"The recovery in Bulgaria has been slow so far and is lagging behind the rebound in most EU emerging economies. The necessary correction of large domestic and external imbalances accumulated during the boom years continues at a fast pace," says the Commission in the section on Bulgaria in its forecast.

The EC predicts that Bulgaria's GDP growth in 2011 will amount to 2.2%, after 0.2% in 2010. Bulgaria's 2013 economic growth is projected at 3.0%.

The EC Fall Economic Forecast presented by EC Commissioner for Monetary Affairs Olli Rehn came a day after Bulgarian Finance Minister said 2012 will be "much harder" than 2011 in economic terms.

He even dubbed the project of the draft 2012 State Budget Act for an economic growth of 2.9% in 2012 to actually be too optimistic judging on the grounds of the most recent information about the global economy that was not available to his team a month ago when the legislation was drawn.

According to latest EC forecast, Bulgaria's inflation will reach 3.6% in 2011, 3.1% in 2012, and 3.0% in 2013, after standing at 3.0% in 2010.

Bulgaria's unemployment is predicted to go slightly up and then slightly down – it is estimated at 12.2% at the end of 2011, up from 10.2% a year earlier, and expected to go down to 12.1% in 2012, and 11.3% in 2013.

Bulgaria's budget deficit is expected to decline to 1.7% in 2012, down from 2.5% in 2011, and 3.1% in 2010, and to go down to 1.3% in 2013. In this respect, the forecast of the EC is much more pessimistic than that of the Bulgarian government since the draft 2012 budget law projects a budget deficit of only 1.35% in 2012.

According to the EC forecast, Bulgaria's current account balance is expected to go positive in 2011 reaching 1.6% of the GDP, after a deficit of 1.0% in 2010. The current account surplus is predicted to decline to 1.4% of the GDP in 2012 and to 0.9% in 2013.

"While exports strongly picked up above pre-crisis levels, domestic demand components have not stabilized yet and real GDP remains almost 5% down from the peak. Although average wages continued to outpace inflation and consumer confidence gradually recovered from the record lows in 2010, consumer demand was constrained by a continued decline in employment, rising consumer prices and building of precautionary savings. Fading net FDI over the past year in a context of still high private-sector indebtedness, conservative bank lending policies and lingering uncertainties on demand expectations greatly restrained the resumption in investment activity," the Commission explains in its economic forecast on Bulgaria.

The EC points out that after initially strong growth in Bulgaira in Q4 2010, momentum is slowing in 2011.

At 2.0% y-o-y (0.3% q-o-q), GDP surprised on the downside in Q2-2011, compared with 3.4% y-o-y (0.5% q-o-q) in Q1-2011.

Full Text of the EC Fall Economic Forecast 2011-2013 on Bulgaria READ HERE

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Tags: EC, European Commission, GDP, GDP growth, economic growth, euro zone, Eurozone, EU, European Union, Eu Commissioner for Economic and Monetary Affairs, Olli Rehn, budget deficit, current account, current account deficit, inflation, unemployment, Bulgarian economy, economic forecast, economic forecasts
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