site.btaUPDATED EC Expects Bulgarian Economy to Grow by 2.4% in 2024, 2.9% in 2025

The European Commission expects the Bulgarian economy to grow by 2.4% in 2024 and 2.9% in 2025. This transpires in the the Commission's autumn economic forecast published on Friday.

The document says that after a prolonged period of stagnation, the EU economy is returning to modest growth, while the disinflation process continues. EU-wide GDP is projected to grow by 0.9% in 2024, marginally up from 0.8% in the euro area. Economic activity is forecast to accelerate to 1.5% in the EU and to 1.3% in the euro area in 2025, and to 1.8% in the EU and 1.6% in the euro area in 2026.

The new forecast revises upwards that of last spring, where GDP growth in Bulgaria was set at 1.9% for 2024. The forecast for 2025 remains unchanged.

For the first time, the EC makes an assumption for 2026, forecasting that the Bulgarian economy will grow by 3%.

Here is what the autumn forecast also says about Bulgaria:

GDP growth is forecast acceleration is expected to be supported by domestic demand and exports. The expansion in income is set to underpin robust private consumption growth. Investments financed by the Recovery and Resilience Facility are expected to bolster gross fixed capital formation, while exports are set to catch up with the external demand.

In 2025, inflation is projected to abate to 2.3%, before accelerating moderately in 2026, due to persistent services inflation.

The fiscal deficit is forecast to increase to 2.6% of GDP in 2024 and reach 2.8% in 2025 and 2026, driven by expenditure on pensions and public sector salaries.

Government debt is set to increase to 24.5% of GDP by 2026.

Public investment is expected to remain stable, on the back of an accelerated implementation of the Recovery and Resilience Plan. Revenue is set to grow commensurate to the economic developments,  broadly offsetting the additional expenditure.

The labour market is bound to remain tight, while the limited and shrinking pool of unemployed and discouraged population is set to keep employment almost constant. Under these conditions firms are expected to curtail new hiring, limiting wage bidding and gradually decreasing nominal wage growth to the average historical rate of around 8-9%.