The European Commission said in its winter economic forecast on February 10 that it expected Bulgaria’s economy to grow by 3.7 per cent this year, lower than its earlier estimate of 4.1 per cent in the autumn forecast.
At the same time, the Commission raised its economic growth projection for 2021 to four per cent (from 3.8 per cent) and the estimate for 2023 to 3.9 per cent (from 3.5 per cent).
Bulgaria is set to issue a gross domestic product flash estimate for 2021 next week and release preliminary GDP figures in the first week of March.
The EC attributed the economic rebound in 2021 to the increase in private consumption and the exports of goods and services, but noted that “investment underperformed […] held back by persistently high uncertainty with regard to the COVID-19 pandemic situation, the introduction of containment measures and the external environment.”
Despite the accelerated inflation, caused by high energy prices and related indirect effects, the EC said that it forecasted economic growth to remain strong in 2022 and 2023, with spending funded under the EU Recovery and Resilience Facility (RRF) expected to stimulate exports and domestic demand.
However, the EC winter forecast also cautioned that higher energy and food prices – the report projected 6.3 per cent and 3.9 per cent headline inflation in 2022 and 2023, respectively – could erode the purchasing power of low-income households in the absence of additional compensations.