The European Bank for Reconstruction and Development has revised downwards its forecast for Bulgaria's economic growth to 1.7% in 2013 due to slumping exports.

The bank cut its forecast for economic growth from 2.5%  in the previous report published in May.

Bulgaria's economy is expected to expand by 1.2% in 2012.

"Recovery is expected to continue to be modest in Bulgaria into 2012, in contrast to earlier projections of vigorous growth, due to sluggish export demand. However, the government continues to adhere to fiscal prudence, with the government budget marginally in surplus in the first five months of the year," EBRD latest Regional Economic Prospects report said.

EBRD praised Bulgaria's government decision to tap international financial markets earlier this month, saying that it "accessed capital markets in July 2012 on favorable terms, with a five-year EUR 950 M eurobond being heavily oversubscribed and achieving a yield of 4.25%."

The European Commission revised sharply downwards its forecast for Bulgaria's economy in the middle of May, 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.

A month earlier 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.