The European Commission has revised sharply downwards its forecast for Bulgaria's economy, estimating it is to grow just 0.5% this year.

The European Union executive previously estimated that the economy of the Balkan country will grow 1.4% this year due to worsening growth prospects in key trading partners across Europe and stagnant domestic demand.

Last month Bulgarian analysts and institutions unanimously cut their growth forecast for 2012 to just below 1.5% instead of the previously forecast 2-3%, citing slumping exports and stagnant domestic demand.

The central bank BNB estimated Bulgaria's economic growth to slow-down to 0.7% in 2012, citing the sovereign-debt crisis in the euro area.

Bulgaria's economy expanded by 1.7% in 2011.

Following the output contraction in late 2011, the EU economy is estimated to be currently in a mild recession. The eurozone economy is forecast to shrink this year as its debt crisis continues to bite.

The European Commission's spring forecast confirmed its prediction of a 0.3% contraction in 2012 in the economies of the 17 countries that use the euro.

It predicted growth of 1.0% for the eurozone in 2013.

European Commissioner for Economic and Monetary Affairs Olli Rehn said "a recovery is in sight" for the eurozone.

But he added: "The economic situation remains fragile, with still large disparities across member states."

For all 27 countries in the EU, the Commission is predicting zero growth for 2012, with 1.3% growth next year.

Growth figures for the first quarter of 2012 will be released by the European statistics agency Eurostat on Tuesday 15 May.

"Economic activity in the EU contracted in the last quarter of 2011 and is estimated to have also done so in the first quarter of 2012," the Commission said in its statement.

Two consecutive quarters of economic contraction are generally taken to indicate a recession is underway.

But the Commission believes that a gradual recovery will start in the second half of the year.

Among the individual member states, the only one predicted to see an economic contraction in 2013 is Spain, which is forecast to decline by 0.3%.

The Commission predicts Spanish unemployment will continue to be the highest in the EU, with the jobless rate hitting 24.4% this year and 25.1% in 2013.

The unemployment rate in the eurozone is forecast to be 11% this year and in 2013, and 10.3% in the EU for both years.

The Commission describes Greece as "an economy longing for the turnaround".

It predicts a contraction in the Greek economy of 4.7% this year and zero growth for 2013, with unemployment at 19.7% in 2012 and 19.6% the following year.

"The recovery, which was previously expected for this year, will be further delayed with, at best, an insignificant improvement in activity in 2013," the Commission said.

We need your support so Novinite.com can keep delivering news and information about Bulgaria! Thank you!