EBRD forecasts Bulgarian economy to grow by 2.5 % in 2016, 2017

In its latest Regional Economic Prospects released on Wednesday, the European Bank for Reconstruction and Development (EBRD) is forecasting that the Bulgarian economy will grow by 2.5% both this and next year.

The latest figures represent slight improvement from the bank's November 2015 forecast when a growth of 2 % was predicted for this year.

Bulgarian figures are above the average economic growth forecasted for the EBRD region, which encompasses 36 countries of operation from Central Europe and the Baltic states, South-eastern Europe, Eastern Europe and the Caucasus,Turkey, Russia, Central Asia and Southern and Eastern Mediterranean.

The forecasts predict an average growth of 1.4 % in 2016 and 2.5 % in 2017 for the countries from the region.

Overall, the EBRD is expecting modest recovery in the countries of the region after five consecutive years of slowdown.

Bulgarian figures are below the average growth for Central Europe and the Baltic States which is estimated to reach 3.1 % both this and next year.

Bulgaria is expected to achieve slightly above the average growth forecasted for the region of South-eastern Europe, of which Bulgaria is part.

The Bulgarian figures are above those for Eastern Europe and the Caucasus, but below the forecast for Central Asia, Southern and Eastern Mediterranean.

In its report, EBRD points to net exports as the main driver of Bulgaria's 3 % economic growth achieved last year, which was aided by weakening euro and exports of investment goods to the EU.

In 2016 and 2017, domestic demand is expected to take over as the main driver of growth, supported by higher disposable income and improving labour market conditions.

However rising consumption, fiscal consolidation and spending discipline will keep growth to 2.5 %.