site.btaCentral Bank Projects 1.9% GDP Growth in 2023

In 2023, real GDP growth in Bulgaria is expected to stand at 1.9% (compared with 3.9% in 2022), according to the November macroeconomic forecast of the Bulgarian National Bank published on Monday.

It will be underpinned by both domestic demand and net exports, while changes in inventories are projected to make a strong

negative contribution. The improvement in domestic demand will be driven by growth in final consumption expenditure, supported by rising wages, higher pensions and other social transfers, as well as by low propensity of households to save.

Real GDP growth is projected to accelerate to 2.7% in 2024 and 3.6% in 2025, mainly due to the end of the decline in inventories in the economy observed in 2023, as well as the expected significant acceleration of investment growth, determined mainly by the underlying assumptions for the implementation of projects under the National Recovery and Resilience Plan (NRRP).

Earlier on Monday, Finance Minister Assen Vassilev told journalists that he expects a GDP growth of 1.8% in 2023.

Annual HICP inflation is projected to slow down to 6.1% at the end of 2023, reflecting mainly the base effect stemming from the strong increase in consumer prices in the previous year. Headline inflation is projected to be 8.8% on average over the year. The HICP growth rate is expected to slow down to 3.1% at the end of 2024 (compared to an annual average of 4.3%) and to remain at this level at the end of 2025 (compared to an annual average of 3.1%).

Risks to the global economic outlook continue to increase, as the military conflict between Israel and Hamas has escalated further geopolitical tensions.

Statistical data and information available by November 10 2023 were used for the forecast.