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Bulgaria's GDP growth to slow down in H2 on "worsened external conditions" - World Bank

Bulgaria's GDP growth to slow down in H2 on "worsened external conditions" - World Bank GDP, Creative Commons.

SOFIA (Bulgaria), October 10 (SeeNews) - Bulgaria's GDP growth is expected to slow down in the second half of 2019 and further in 2020 due to the worsened external environment and the toll it takes on exports, the World Bank said.

Bulgaria's real gross domestic product growth is projected at 3.2% for the full year 2019, up from 3.1% in 2018, with final consumption expected to act as growth driver in the second half, while exports wane, the World Bank said in an Economic Update for Europe and Central Asia report published on Wednesday.

The country's economic growth is seen slowing down to 3.0% in 2020 and then accelerating to 3.1% in 2021.

"Investment growth is likely to pick up in H2 as local elections approach in October and the military aircraft acquisition is accounted for," the bank noted, adding that the backloading of certain expenses and unplanned military spending in the second half of 2019 will most likely result in a small budget deficit for the full year.

On August 8, Bulgaria's defence ministry transferred in full the agreed sum of $1.2 billion (1.1 billion euro) for the delivery of eight F-16 Block 70 fighter jets along with the related equipment and weapons from the U.S. Bulgaria's parliament ratified the deal with the U.S. and approved a revision of the 2019 budget deficit to 2.1% of the projected gross domestic product in order to finance the purchase.

Earlier in August, Bulgaria sent requests for proposals to four manufacturers for delivery of 150 armoured vehicles for its army in a 1.46 billion levs ($823 million/746 million euro) tender, VAT included.

The current account balance is projected to remain in positive territory in the medium term but shrink in 2019 compared to 2018, mostly due to underperforming exports of goods and services in the second half and a weaker summer tourist season, the World Bank said.

"Risks to the outlook stem mostly from the external environment, including the ongoing global trade tensions," the World Bank said adding that the ongoing slowdown of the Chinese economy is having both direct and second-round effects on Bulgaria, since China already ranks as the country’s second largest market outside the EU.

Bulgaria posted higher-than-projected growth of 3.5% year-on-year in the first quarter of 2019, then GDP expansion slowed down to 3.3% in the following quarter - on the back of negative signals from the Eurozone and particularly from Bulgaria’s major markets Germany and Italy, the World Bank said. 

($ = 0.90682 euro)