August 26 (SeeNews) - Bulgaria's real gross domestic product (GDP) is expected to increase in the second half of 2021 compared with the first half if all coronavirus restrictions in the country and its major trading partners are phased out, the central bank said.
"This will be accompanied by a certain weakening of the role of fiscal policy due to the assumption of a phase-out of some government anti-crisis measures related to the COVID-19 pandemic," the Bulgarian National Bank (BNB) said in a second-quarter Economic Review publication.
According to the central bank, in the second quarter of 2021 short-term economic indicators in Bulgaria signalled continuous growth in the economic activity in line with easing of certain anti-epidemic measures in the country.
Bulgaria's GDP increased by 9.6% on an annual comparison basis in the second quarter of 2021, following a 1.8% decrease in the previous quarter, the National Statistical Institute (NSI) said earlier this month.
The central bank also said that in the third and fourth quarters of 2021 the gradual acceleration of inflation is expected to be sustained, reflecting mostly the assumptions of upward developments in international food and petroleum product prices over this period compared with the end of last year.
According to the most recent data published by the NSI, Bulgaria's consumer prices rose by 3.0% year-on-year in July, following a 2.7% increase in June.
"In line with the international environment and developments in Bulgaria’s main trading partners, external demand for Bulgarian goods and services is expected to post significant year-onyear growth in the third and fourth quarters of 2021, with 2020 low base effects contributing essentially to this dynamics," the BNB noted, adding that the forecast is based on the assumption that the containment measures imposed in Bulgaria and other EU member states will be phased out in the second half of this year.
The central bank said that in the second half of 2021 the growth in deposits of the non-government sector is expected to slow down slightly in line with a projected gradual rise in economic activity and private consumption. "Projected domestic demand growth, still low lending rates and positive housing market prospects will favour the growth of credit to the private sector over the projection horizon," the BNB said.