SOFIA (Bulgaria), July 7 (SeeNews) – Most southeast European states saw higher-than-expected growth in gross domestic product (GDP) in the first quarter of 2008, but quickening inflation and rising energy prices cloud analysts' forecast for end-year results.
Real economic growth in the region varried from 4.3% in Croatia to 8.2% for Serbia and Romania. Albania and Bosnia do not publish quarterly GDP statistics.
Four analysts approached by SeeNews agreed that the first-quarter growth of 7.0% in Bulgaria versus 5.5% for the year-ago period was surprising and forecast a possible slowdown in the second and the third quarter.
The first-quarter growth in the EU newcomer was attributed to a retained momentum in the construction sector from last year, legalising businesses previously operating in the informal economy and higher value added, but Bulgaria’s economy might stumble over rising fuel prices and speeding inflation, analysts agreed.
However, analyst forecasts are more optimistic than the government's target of 6.2% GDP growth for 2008, same as in 2007, because they assume a good crop year.
Bulgaria’s northern neighbour Romania, another EU newcomer, also had faster-than-expected economic growth of a real 8.2% in the first quarter of 2008, compared to 6.1% a year earlier. Growth was fuelled by a 35.2% increase in investments in the economy, rising net taxes on products, exports and a further rise in consumption, analysts said.
However, rapid economic growth forced Romania's central bank to raise for the sixth time in a row its key interest rate in June to fight off stubborn inflation.
Similar to Bulgaria, analysts in Romania see a GDP growth higher than the central bank target of 6.0% for 2008, to more than 7%, thanks to an expected good farm output.
Bulgaria and Romania, which joined the EU in 2007, seem to have evaded significant economic shocks from the global credit crunch, but have to address rising current account deficits and possible economic overheating.
Slovenia, the sole ex-Yugoslav state that has joined the EU so far, saw its economy grow by a real 5.4% in the first quarter of 2008, quicker than projected and above the 4.7% rate in the previous quarter thanks to ongoing intensive construction of motorways in the country.
Analysts expect Slovenia's GDP growth to slow down by the end of the year, like growth through March that fell from 7.2% in the first quarter of 2007.
The Slovenian government's Institute of Macroeconomic Analysis and Development (UMAR) has projected a real 4.4% growth for 2008, down from a 6.1% last year, largely in line with analyst expectations, based on ongoing repercussions from the global financial crisis and possible halt of large infrastructure projects in view of the general elections due in the autumn.
Croatia’s first-quarter economic growth of a real 4.3% mostly met analyst forecasts, but an expected decrease in household consumption, investment activities and rising trade deficit, amid accruing inflation, may slow 2008 growth to below 4.0%, compared to 4.5% government target and previous analyst estimates of above 4.0%. First-quarter growth compared to 7.0% rise in GDP a year earlier and 3.7% increase in the last quarter of 2007.
In contrast, Serbia's government raised its growth target to 7.0% from 6.0% based on speeding privatisations, rising foreign investment and progress in building closer ties with the European Union. The country saw a real 8.2% GDP growth through March, as fast as it grew a year earlier, but faster than the annual 6.9% rise in the last quarter of 2007. Serbia's economy grew by a real 7.5% last year, compared to 5.7% for 2006.
Macedonia can meet its economic growth target of 6.0%-6.5% for 2008, up from 5.0% last year, if it sustains the growth of 5.2% achieved in the first quarter but prospects would be threatened by any further rise in energy prices, Macedonian experts agreed.