site.btaBulgarian Development Bank Expects Bulgaria's GDP to Grow by 4% in 2021, 4.6% in 2022

Sofia, December 29 (BTA) - Bulgaria's GDP growth for this year is expected to be 4 per cent, and in 2022 the rate could reach 4.6 per cent, according to the December bulletin of the Bulgarian Development Bank (BDB), which was published on Wednesday, and based on the updated forecast of Ministry of Finance.

For 2023 and 2024, growth is projected to slow to 3.7 per cent and 3.4 per cent, respectively. Household consumption, boosted by declining unemployment, rising incomes and loans, remains in the leading position.

External demand is expected to slow down and, respectively, exports will have a decreasing contribution to real GDP growth by the end of the forecast period.

This country's trade balance will deteriorate from minus 5.3 per cent of GDP for the current year to minus 8.1 per cent of GDP in 2024. This forecast may be too conservative and will be revised by the end of next year, according to the BDB release.

The balance of payments maintains its stable external position. The balance on the capital account is expected to remain above the average of recent years due to incoming transfers under the National Recovery and Resilience Plan of a total of 12.6 billion leva in grants for the entire period. The plan is to complement these funds with national co-financing and private investments to a total amount of about 2.5 billion leva.

According to preliminary data of the National Statistical Institute, the monthly inflation in November was 1.4 per cent, and 6.8 per cent since the beginning of the year. The annual inflation for November 2021 compared to November 2020 is 7.3 per cent.

The largest contributors to the price increase are transport, electricity and utilities, food and entertainment and cultural spending. BDB forecasts that at the end of 2022 inflation will slow to 3.1 per cent.

The root cause and leading factor for accelerated inflation are supply problems and deficits, the effect of which is exacerbated by the rapid recovery of aggregate demand.

The spread of new variants and strains of the coronavirus, including Omicron, is expected to further increase inflationary pressures.

As of October 31, 2021, the total amount of loans confirmed for inclusion in the guarantee programme to support companies hit by the COVID-19 pandemic, implemented by BDB and a network of partner banks, amounts to nearly 388.2 million leva (with 2,219 loans approved). As of October 31, the distribution of funds is as follows: 43.5 per cent of the amount of the guaranteed portfolio is in favor of small enterprises, 26.3 per cent for micro-firms, 21.9 per cent - for medium-sized enterprises, and the remaining 8.3 per cent - for large enterprises.

According to the summarized data, the largest share (33.2 per cent of the total number of loans and 35.5 per cent of the total amount) in the approved subsidized loans is occupied by the sector "Trade, repair of motor vehicles and motorcycles". The Hotel and Restaurant Sector benefited from 10.2 per cent of the total number of approved loans and 9.4 per cent of the total amount, followed by the Transport, Warehousing and Post Sector with 13 per cent of the total number and 7.8 per cent of total loans.