The autumn OECD forecast expects slowdown of Bulgaria’s economic growth to 1.7% in 2023

The Organisation for Economic Cooperation and Development (OECD) expects that Bulgaria’s GDP growth will slow to 1.7% in 2023, compared to  2.8% in 2022. Exports will be adversely affected by the deteriorating macroeconomic situation in Europe, while high energy prices and rising interest rates will weigh on consumption. The GDP growth will rebound to 3.1% in 2024, supported by investments from EU funds.

The OECD expects that the inflation will moderate from 14.1% in 2022 to 7.5% in 2023 amidst stabilising energy prices and subdued economic activity. The inflation rate will continue declining gradually to 4.8% in 2024.

The labour market will remain resilient with only a marginal increase in unemployment in 2023. Labour shortages will keep unemployment low and real wage growth positive at around 1%.

The measures aimed at reducing the impact of the high energy prices are estimated to cost 3.2% of GDP for 2022. If current commitments implemented until the end of the year are upheld in 2023, the budget deficit would exceed 4.3% of GDP.

According to the OECD, upward risks to the inflation outlook are created by stronger second-round effects from further wage increases. Political uncertainty places planned investments at risk. There is also a risk of maintaining support measures longer than necessary and delaying fiscal consolidation.

You can read the full text of the press release here.