October 11 (SeeNews) - The International Monetary Fund (IMF) said on Tuesday that it projects that Bulgaria's real economy will expand by 3.9% in 2022, lifting its June forecast for a 2.8% growth.
Bulgaria's gross domestic product (GDP) is then expected to ease to 3.0%, the IMF said in the October 2022 edition of its World Economic Outlook (WEO) report, downgrading its forecast of 4.5% economic growth in 2023 as pencilled in the report's April issue.
Bulgaria's GDP growth reached 4.2% in 2021.
Consumer price inflation is seen accelerating from 2.8% in 2021 to 12.4% this year, before easing to 5.2% in 2023. In April, the IMF had projected inflation to speed up to 11% in 2022, then abate to 3.3% in 2023.
The unemployment rate in Bulgaria is forecast to increase in 2022 to 5.1% from the 4.9% set in April, although it will be marginally lower than the 5.3% recorded last year. In 2023, the jobless rate will decline to 4.7%, without significant change from the 4.6% projected in April.
The global knock-on effects of the coronavirus pandemic, which is not yet eradicated, have been compounded, in Europe in particular, by Russia's war on Ukraine which has exacerbated inflationary pressures through an unexpected energy supply crisis, the IMF said. Inflation worldwide is forecast to peak in late 2022 but persist for longer than foreseen before.
"Downside risks to the outlook remain elevated, while policy trade-offs to address the cost-of-living crisis have become acutely challenging. The risk of monetary, fiscal, or financial policy miscalibration has risen sharply at a time when the world economy remains historically fragile and financial markets are showing signs of stress," the global lender noted.
Bulgaria's current account deficit is expected to be equivalent to 0.9% of GDP in 2022, down from 2.2% of GDP forecast in April. In 2023, the current account gap is seen expanding to 1.4% of GDP.
The IMF expects the real economy of the Emerging and Developing Europe area, which comprises Romania, Russia, Turkey, Poland, Ukraine, Hungary, Belarus, Bulgaria, Serbia and Croatia, to stagnate in 2022 before inching up to 0.6% growth in 2023.
Inflation in the region is seen ballooning to 27.8% in 2022 from 9.5% in 2021, before dipping slightly to 19.4% next year.
"Central banks around the world are now laser-focused on restoring price stability, and the pace of tightening has accelerated sharply. There are risks of both under- and over-tightening," the IMF cautioned in the report.