site.btaCentral Bank Forecasts Slowdown in Bulgaria's Real GDP Growth to 1% in 2023

The Bulgarian National Bank (BNB) forecasts a slowdown in Bulgaria's real gross domestic product (GDP) growth to 1% in 2023 in its analysis "Macroeconomic Forecast" (June 2023), published here on Thursday.

BNB's forecast for the country's main macroeconomic indicators in the current and next two years was prepared as of July 3 and is based on assumptions about the development of the international conjuncture and the dynamics of prices of major commodity groups on international markets as of June 19, 2023, the document explains.

“In 2023, we expect real GDP growth to slow down to 1% (from 3.4% in 2022), driven mostly by a shift from a positive to a negative contribution of inventory change in the economy,” the report reads.

Other factors that will constrain the growth of economic activity in the country during the year are the projected decline in government consumption in real terms, the slowdown in private consumption growth and the persistence of a negative contribution from net exports. At the same time, after two consecutive years of decline, the central bank expects fixed capital investment to increase on an annual basis in 2023, mainly due to the technical assumption in the forecast about the absorption profile of EU funds by both the public and private sectors.

BNB expressed expectations that the real GDP growth will accelerate to 3.2% in 2024, mainly due to a contraction in the negative contribution of inventory change, and to 4% in 2025 due to an expected significant acceleration in investment growth resulting mainly from the implementation of projects under the National Recovery and Resilience Plan.