July 14 (SeeNews) - Bulgaria's real gross domestic product (GDP) growth is expected to slow down to 1.9% in 2022, the country's central bank said lowering its earlier projection of 2.1% made in March.
Economic growth is then expected to decelerate to 1.7% in 2023 before speeding up to 3.7% in 2024, the Bulgarian National Bank (BNB) said in the latest edition of its quarterly economic review published on Wednesday.
In March, the central bank had forecast Bulgaria's GDP to grow by 3.9% in 2023.
The revised assessments were made taking into account projections for lower demand for goods and services by Bulgaria's main external trading partners over the next couple of years, compounded by the likelihood of commodity prices remaining high due to the war in Ukraine during the whole forecast period, the central bank said.
Prices of natural gas on European commodity markets are set to continue to grow significantly in annual comparison terms through to the end of 2022, while crude oil prices will increase to the first quarter of 2023 and those of electricity will grow to the third quarter of 2023.
Industrial output growth and labour shortages will lead to medium-term wage growth, which will free up household income stimulating domestic demand. In itself, domestic demand will be a key driver of GDP growth in 2023, resulting from a faster absorption of funds under the national Recovery and Resilience Plan (RRP).
The central bank's base scenario forecast sees inflation in Bulgaria accelerating to 14.7% in 2022, up from the 9.6% projected in March. Consumer prices growth will occur across all main goods and services, due to higher global prices of raw materials, energy and agricultural goods which will lead to higher production expenses for companies.
Inflation is expected to slow down to 3.8% at the end of 2023, reaching 3.1% in 2024, the central bank added.
Bulgaria's consumer prices rose by 15.6% year-on-year in May after adding 14.4% in April, the national statistical office said last month.
In May, the European Commission said that it expects Bulgaria's GDP to grow by 2.1% in 2022, lowering its interim projection of 3.7%.