The southeastern members of the European Union have had their economic growth slow down considerably in 2023, yet rates continue to exceed those of most economies in the EU, reflecting high levels of consumption, according to the European Bank for Reconstruction and Development's (EBRD) latest report on the economic outlook for different regions of the world, released on Wednesday.
Concerning the economies of the EU's south-eastern region - Bulgaria, Romania and Greece - EBRD experts point to positive investment trends and expectations of a substantial inflow of funds from Brussels to them in the coming years. This, together with strong wage growth, will boost growth in the short and medium term, the international institution's report says.
The economies of Bulgaria, Romania and Greece are expected to maintain their growth rates set in OECD's September 2023 forecasts of 2.8% in 2024 and 3.1% in 2025.
The EBRD experts forecast that Bulgaria's gross domestic product (GDP) will grow by 2.6% in 2024 and by 3% in 2025. Moderating inflation, robust consumption and slowly recovering foreign demand will have a positive effect on economic growth.
Key downside risks to the forecast include further delays in EU funds absorption and reforms amid elevated political uncertainty.
In its previous economic outlook report - from September 2023 - the bank had the same expectations for Bulgaria's economy.
The experts recalled that Bulgaria's GDP growth moderated to 1.8% in 2023 amid lower foreign demand and a lower contribution from industry and the services sector, while private consumption in the country increased by 5.4%.
Strong wage growth and falling inflation, which reached 3.1% year-on-year in March 2024, led to relatively high real wage growth in 2023. The minimum wage was further increased by almost 20% in 2024.
Investment growth also accelerated in the second half of 2023, the EBRD reported.
The ongoing political crisis in Bulgaria, however, poses risks to the prospects for public investment and the absorption of EU funds, the report's authors warn.
Weaker demand in the EU led to a 1.9% drop in Bulgarian exports in 2023 (in real terms), offset by a more notable decline in imports.
In nominal terms, Bulgaria's exports to non-EU European economies, including Ukraine, fell by almost a fifth in 2023, reflecting lower export prices for fuel and electricity, the report said.
/RY/
news.modal.text
