EU winter economic forecast raises Bulgaria 2024 growth estimate to 1.9%

The European Commission said in its winter economic forecast on February 15 that it expected Bulgaria’s economy to grow by 1.9 per cent this year, up from its earlier estimate of 1.8 per cent in last year’s autumn forecast.

At the same time, the Commission lowered its economic growth estimate for 2025 to 2.5 per cent from 2.6 per cent in the autumn forecast.

In 2023, Bulgaria’s economy grew by two per cent, the EC said, in line with its previous projection. Bulgaria is set to release preliminary gross domestic product figures on March 8.

The EC said that despite weaker external demand and higher interest rates in 2023, Bulgaria’s private consumption grew, supported by a “strong labour market, improved consumer confidence, the decline in inflation and strong lending activity.”

“Domestic demand is now expected to be the main growth driver. Although exports are set to rebound already in 2024, a negative carry-over effect from 2023 is weighing on the annual growth projection,” the EC said.

On inflation, the Commission noted that it fell from 14.3 per cent in December 2022 to five per cent in December 2023, averaging 8.6 per cent over the course of last year. That figure is expected to “decelerate markedly” to 3.4 per cent in 2024.

The EC’s winter forecast projected Bulgaria’s economic growth to outpace that in the euro zone and the EU as a whole in 2024, which are estimated to grow by 0.8 per cent and 0.9 per cent, respectively. In 2025, the Commission’s forecast projected 1.5 per cent and 1.7 per cent growth in the euro zone and the EU27, respectively.

However, inflation in Bulgaria was also expected to be higher. The EC forecast an average harmonised inflation of 2.7 per cent in the euro area in 2024 (and three per cent in the EU27).

The figures indicated that Bulgaria would struggle to meet the inflation criterion for joining the euro zone, with Bulgaria currently aiming for 2025 as an accession date.