site.btaEuropean Commission's Winter 2016 Economic Forecast for Bulgaria: "Gradual Rebalancing amid Moderate Growth"

European Commission's Winter 2016 Economic Forecast for Bulgaria: "Gradual Rebalancing amid Moderate Growth"

Brussels, February 4 (BTA) - Bulgaria's real GDP is expected to have grown by 2.2 per cent in 2015 year-on-year, driven mainly by exports and falling oil prices, before dropping to 1.5 per cent in 2016, as the boost from factors including EU funds absorption weakens. GDP growth, however, is set to recover to 2.0 per cent in 2017 as domestic demand strengthens, reads the country forecast within the European Commission's Winter 2016 Economic Forecast, published on Thursday. The forecast for Bulgaria is summarized as "gradual rebalancing amid moderate growth".

"Inflation is projected to remain negative well into 2016 but to turn positive towards the end of the year. The general government deficit is expected to gradually decrease from 2.5 per cent in 2015 to 2 per cent of GDP in 2017," the country forecast reads.

"While benefitting from low inflation and fuel prices, limited wage growth and a less expansionary fiscal stance suppressed private consumption in 2015. Private consumption growth is expected to strengthen from 0.7 per cent in 2015 to 1.4 per cent in 2016 and 1.7 per cent in 2017. However, risk aversion, an unsupportive business environment and restrained foreign capital inflows are set to curb investment growth in 2016-2017 despite favourable financing conditions and the rise of capacity utilisation in the manufacturing sector back to its historic average. Public investment is expected to drop in 2016 with the slowdown of the implementation of projects co-financed by the EU, before resuming growth in 2017."

Exports are projected to outpace imports over the forecast horizon, supported by higher demand from the EU, resulting in positive contributions of net exports to economic growth. Exporting industries are also expected to continue benefitting from the depreciated euro, to which the national currency is pegged, given that a substantial portion of Bulgarian exports go to non-euro area countries."

The European Commission expects that the labour market conditions will improve in 2016 and 2017. "Employment further increased in the first three quarters of 2015, mainly in the manufacturing, ICT and construction sectors. Employment growth is projected to marginally increase from 0.3 per cent in 2015 to 0.4 per cent in 2016 and 0.5 per cent in 2017, supported mainly by export-oriented industries. Together with the expected decrease in the labour force due to population aging and emigration, this is likely to further reduce the unemployment rate to 9.4 per cent in 2016 and 8.8 per cent in 2017," the country report reads further.

Forecasts for Bulgaria:

- GDP growth (percentage, year-on-year): 1.5 (2014), 2.2 (2015), 1.5 (2016), 2.0 (2017)

- Inflation (percentage, year-on-year): -1.6 (2014), -1.1 (2015), -0.1 (2016), 0.9 (2017)

- Unemployment (percentage): 11.4 (2014), 10.1 (2015), 9.4 (2016), 8.8(2017)

- Public budget balance (percentage of GDP): -5.8 (2014), -2.5 (2015), -2.3 (2016), -2.0 (2017)

- Gross public debt (percentage of GDP): 27.0 (2014), 28.2 (2015), 29.7 (2016), 30.7 (2017)

- Current account balance (percentage of GDP): 0.7 (2014), 1.9 (2015), 2.2 (2016), 2.8 (2017)