The International Monetary Fund has predicted a 1% GDP growth in Bulgaria in 2012, increasing its earlier estimate of 0.8%.

The country's unemployment rate is to reach 12.5% at the end of the year, IMF believes.

"Our forecast is for the real GDP growth to reach 1% in 2012 courtesy of the stronger domestic demand boosted by the European Union's structural funds," Catriona Purfield, Deputy Division Chief at the International Monetary Fund has explained, as cited by the Bulgarian Telegraph Agency.

The Bulgarian economy will expand by 1.5% as exports recover, the IMF has also said.

The IMF has urged the Bulgarian government to maintain its budget deficit at 1.25% of GDP next year, too.

"Strong buffers and steadfast policy implementation have allowed Bulgaria to maintain stability in a challenging environment," the IMF has observed, as cited by Bloomberg.

"However, growth remains weak, unemployment is high, and the economy remains exposed to external risks, particularly from the euro area crisis."

In June, the World Bank revised sharply downwards forecasts for Bulgaria's economy, estimating it is to expand just 0.6% this year.

At the beginning of May the European Commission slashed 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.

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.

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