site.btaUBB Report: Economy Will Grow by 2.3% in 2024

All sectors of the economy were in effect engines of growth in the first quarter of 2024, according to a United Bulgarian Bank (UBB) report. The Bulgarian economy grew by 1.8% in January-March compared with the same period in 2023, according to adjusted statistical data.

"Growth was mainly driven by the services sector. Although it did not grow the fastest in the quarter - by 1.6% (in real terms), it pushed up GDP strongly due to its huge relative share of 60%. Against this backdrop, the industry reported a more than two-fold increase in output, at 3.4%, but its impact was weaker as it accounted for more than three times smaller relative share, at 19.1%. Agriculture grew by 1.4% (4.5% share in the country's economy), while the smallest industry, that of construction, accounting for only 2.6% of GDP, also increased its output by 0.5%. However, construction involves a certain part of the industry's production, which supplies it with many materials and goods, so its importance is not limited to its direct relative share in GDP," UBB's chief economist Dr Emil Kalchev said in the analysis obtained by BTA on Monday.

The economic data from the first quarter of the year confirm the positive forecast of the bank's analysts for economic growth of 2.3% in 2024.

In May, for the first time this year, there wasn acceleration, albeit slight, in price growth (compared to May last year), Dr Kalchev said.

The European Central Bank (ECB) announced its decision to cut key interest rates by 0.25% in view of the recorded sustained decline in inflation in the euro area. The move is expected to ease financing conditions and provide some stimulus for slightly faster economic growth, the analysis adds.

"By the end of 2024, we expect a further decline in interest rates (most likely in two steps) on the refinancing rate from 4.25% (now) to 3.40% and on the deposit rate from 3.75% (now) to 3.25%. Accordingly, our expectations for euro area growth rise from 0.4% to 0.7% in 2024," UBB's chief economist Dr Emil Kalchev forecast.