Bulgaria's minfin affirms 2024 economic growth f'cast at 3.2%

Next year, gross domestic product (GDP) growth is expected at a real 2.7%, lower than the 3% forecast made in the autumn, the ministry said in its 2024 Spring Macroeconomic Forecast on Monday. GDP growth is then seen to maintain its level in 2026 and slightly decelerate to 2.6% in 2027.

In 2023, the country's GDP increased by a real 1.8%, following a 3.9% expansion in 2022, according to preliminary data published by the National Statistical Institute (NSI).

Inflation under the EU Harmonised Index of Consumer Prices (HICP) is projected to ease in 2024 to an annual average of 2.4% and 2.3% at the end of the year. This compares to the autumn forecast for an average inflation of 4.8% in 2024. Core inflation components and services will contribute the most to the inflationary process.

HICP inflation is seen to speed up to an annual average of 2.8% next year before slowing down to 2% in 2026 and 1.9% in 2027.

Employment growth for 2024 is expected at 0.5%, slightly lower than the autumn projection of 0.6%, and is seen to slow to 0.3% between 2025 and 2027. This is mainly due to the country's negative demographic development and the depleting opportunities to improve labour supply.

The ministry forecasts a rise in Bulgaria's unemployment rate to 4.2% in 2024, compared to 4% expected in the fall, but with a possibility of lowering over the next three years.

The country's stable external position is projected to persist from 2024 to 2027. In 2024, the ministry expects a current account deficit of 1.3% of GDP, driven by higher growth in imports of goods relative to exports.

The ministry said it prepared an alternative macroeconomic scenario, considering potential risks like a less favourable development of the external environment and higher international prices of raw materials. Under that scenario, inflation in the country will be higher compared to the baseline by 0.8 and 0.3 percentage points in 2024 and 2025, respectively, while real GDP growth will be lower by 0.7 and 0.6 percentage points in 2024 and 2025, respectively.

Source: Ministry of Finance, Bulgaria.