OECD lowers Bulgaria's 2024 GDP growth f'cast to 2.8%

"The catch-up in the disbursement of EU funds is expected to contribute positively to private investment in 2024 and beyond," the OECD said in its November 2023 Economic Outlook published on Wednesday. While export growth will remain weak in the short term, a gradual recovery is projected throughout 2024, in line with euro area developments.

The OECD also cut its GDP forecast for 2023 to 1.7% from 1.9% projected in June, citing a weaker-than-expected external environment and an easing of private consumption.

Inflation is expected to average 9.5% in 2023, before easing to 4.5% in 2024, driven by declining energy prices. Inflation is then seen to further slow to 3.1% in 2025.

"The large, planned minimum wage increases in 2024 create risks of more persistent inflation, while changes in global energy prices could impact exports and inflation," the OECD said.

The tight labour market is expected to persist due to demographic headwinds, with a low but rising unemployment. The intergovernmental organisation projects unemployment at 4.4% this year, which is seen to grow to 4.9% and 4.8% in 2024 and 2025, respectively.

The OECD recommends that Bulgaria focus on fiscal consolidation to manage economic demand and address long-term challenges, alongside implementing structural reforms to counteract the shrinking labour force and incentivise youth retention. Additionally, the country should develop a comprehensive green transition roadmap, building on the strategic vision for the sustainable development of the electricity sector.