site.btaFinance Ministry Projects Inflation to Reach 1.9% at Year-End

Inflation at the end of 2024 is projected to reach 1.9%, according to the Finance Ministry’s autumn macroeconomic forecast published on its website. This marks a downward revision from the Ministry’s spring forecast, which had predicted year-end inflation, as measured by the harmonized index of consumer prices (HICP), would be 2.3%. Bulgaria’s annual average inflation is expected to be 2.6% for 2024, the autumn forecast indicated.

At the end of 2025, the increase in consumer prices based on the HICP is projected to be 2.6%, which is 0.4 percentage points higher than the spring forecast. This increase is attributed to changes in energy commodity prices. Services will again be the main driver of inflation, followed by food prices, the Ministry noted. The average annual increase in the headline index is expected to slow to 2.4% in 2025, down from the previously forecasted 2.8%. The average annual inflation is projected to reach 2% by 2028, largely due to an expected downward trend in international prices.

Real GDP growth for 2024 is expected to reach 2.2%, a decline of 1 percentage point from the spring forecast.

The Finance Ministry's autumn revision takes into account the revised GDP data released by the National Statistical Institute on October 18, 2024. The data indicate that the nominal GDP for 2023 was increased by BGN 1.5 billion, and the growth rate in constant prices was adjusted from 1.8% to 1.9%. For the first half of 2024, the nominal GDP was revised upward by BGN 550 million. While the real GDP growth for the first half remained unchanged, revisions were made to its components.

Economic growth is projected to accelerate to 2.8% in 2025, driven by increased public spending. This is a 0.1 percentage point upward revision from the spring forecast. In 2026, GDP is expected to grow by 3%, an increase of 0.3 percentage points compared to the previous forecast. However, growth is expected to slow to 2% in both 2027 and 2028.

In 2027 and 2028, GDP growth is expected to slow due to the diminishing positive effects of investments under the Recovery and Resilience Plan, a slowdown in household consumption growth in line with income growth, and a slowdown in export growth in response to external demand, according to the Ministry.

The autumn forecast was based on statistical data available as of November 15, 2024.

The forecast for GDP growth and inflation aligns with the expectations of the Bulgarian National Bank (BNB), which also projects 2.2% economic growth and 1.9% inflation by the end of the year. According to the BNB's latest macroeconomic forecast, the HICP-based annual average inflation for 2024 is expected to reach 2.5%.