site.bta Brexit Will Slow Down Bulgaria's 2016 Economic Growth by 0.2 Percentage Points - Expert

Brexit Will Slow Down Bulgaria's 2016 Economic Growth by 0.2 Percentage Points - Expert

Sofia, July 4 (BTA) - Britain's decision to leave the EU will lead to a deceleration of Bulgaria's economic growth by about 0.2 percentage points this year and by 1.1 percentage points next year, UniCredit Bulbank Chief Economist Kristofor Pavlov said.
 
After the UK's referendum on withdrawal from the EU, Britain's economic growth will slow down to about 0 per cent next year, compared to about 2.0 per cent before that, Pavlov said in a press release of the bank.
    
As Britain is the world's fifth largest economy, this will impact the global economy, including Bulgaria.  As Britain accounts for a mere 2.5 per cent of Bulgaria's total commodity exports, the indirect impact will be more significant and will affect western retail chains with broader business contacts with that country. Experts expect the euro zone economies to grow about 1.0 per cent, instead of 1.6 per cent as expected earlier.
   
The referendum results will have a negative effect on global investment demand and, consequently, on the demand in the emerging markets in Central and Eastern Europe, Bulgaria included. Capital flows into Bulgaria could be expected to slow down to a certain extent.
  
The effect on the financial sector will be modest because the Bulgarian economy remains stable against external shocks because of the lack of new macroeconomic imbalances. The country enjoys a very favourable combination of strong financial parameters, a moderate current account surplus, abundant international reserves, and declining needs of external financing.
    
According to the expert, the Government can afford to take measures to offset the adverse effects. These will probably mean increase of public investment expenditure at the expense of increasing the budget deficit from the forecast 1.8 per cent of GDP to 2.5 per cent of GDP next year.