site.btaUBB Maintains 2.3% Economic Growth Forecast for Bulgaria in 2024

The economic outlook for the euro area is improving slightly, which has led to a slight revision of the United Bulgarian Bank (UBB) experts' expectations for eurozone growth this year: from 0.5% to 0.7%. From a current perspective, this will have a noticeable impact on the Bulgarian economy this year, which is why the bank is maintaining the 2.3% economic growth for 2024, UBB quoted its chief economist Emil Kalchev as saying. 

The bank's analysts report that in the first quarter of 2024 the Bulgarian economy grew by 1.8% in real terms compared to the same period in 2023, according to the NSI's adjusted preliminary data.

Kalchev explained that economic activity in the [first] quarter was driven by final consumption, which grew robustly by 3.4% in real terms with a dominant relative share of 85.7% in the GDP structure. Against this backdrop, investment grew significantly faster at 7.9% and, on the basis of its much smaller share of 18.5% in GDP, also contributed to the real growth of the economy. Conversely, net exports remained negative and held back annual real GDP growth, although exports, with a 2.1% decline, again contracted far more slowly than imports, which fell by 3.7%, compared to the first quarter of last year, said Emil Kalchev.

Against the backdrop of persistent unemployment of 4.4% in January, February and March and falling inflation, average monthly wages accelerated again, reaching a 17.8% year-on-year increase in March. 

The expected normalisation in wage growth signalled by the December data (11.8% growth) did not take place in the first quarter of this year. The main factors driving up wages are an overly tight labour market characterised by weak supply, state policy in a situation of political instability and party confrontation, the catch-up process within the EU and psychological dynamics that still do not take into account falling inflation, Kalchev argued. 

Price growth continued to slow in April. Harmonised inflation thus declined to 2.5 % year-on-year. Underlying inflation (excluding food and fuel) reached 2.6%. Consumer inflation by the national methodology was even slightly lower at just 2.4%, the analysis said.