site.bta European Commission's Forecast for Bulgaria's Economic Growth in 2017 and 2018 Remains Unchanged

European Commission's Forecast for Bulgaria's Economic Growth in 2017 and 2018 Remains Unchanged

Brussels, May 11 (BTA) - The European Commission's expectations about Bulgaria's economic growth in 2017 and 2018 have remained unchanged in May 2017 compared with February 2017.

The Commission's Spring 2017 Economic Forecast, unveiled on Thursday, shows that Bulgaria's real GDP is expected to grow by 2.9 per cent in 2017, and growth in 2018 is forecast to marginally decline. Domestic demand continues to be the main growth driver over the forecast horizon, the report says. Inflation is forecast to turn positive in 2017. Unemployment is expected to continue decreasing in the coming years.

The report further says that a balanced budget was achieved in Bulgaria in 2016 mainly due to higher tax revenues and reduced public investment, but a deficit of 0.4 per cent of GDP is forecast in 2017.

Risks to Bulgaria's growth outlook are broadly balanced, according to the European Commission. As a domestic downside risk, a significantly slower than expected implementation of EU funds could dent investment and growth. Given the openness of the economy, weaker import demand from the main trading partners, especially in Europe, and surging oil prices would pose external downside risks. On the upside, stronger-than-expected consumer confidence and faster progress with reforms could lift real growth rates.

Bulgaria has experienced deflation since 2013. Following negative annual HIPC inflation also in 2016, inflation is expected to reach 1.3 per cent in 2017 due to strong domestic demand, higher administrative prices for utilities and recovering energy prices. In 2018, inflation is forecast to reach 1.5 per cent.

The gradual increase in employment, together with an expected stagnation in the labour force are likely to reduce the unemployment rate to 7 per cent in 2017 and 6.4 per cent in 2018, the European Commission predicts.