site.btaUniCredit Forecasts 2% to 3% 2025 GDP Growth in Most Central and Eastern European Countries, 2.8% for Bulgaria

In most Central and Eastern European (CEE) countries, GDP growth will be between 2% and 3%, 2.8% for Bulgaria, UniCredit Bulbank reported.

CEE countries will face more environmental changes, but the region continues to have great potential for growth and will remain attractive for investors, pointed out bankers and macroeconomists who participated in the panel discussions of The Central & Eastern Forum in Vienna, quoted by UniCredit.

UniCredit Director for CEE, Teodora Petkova, who participated in a panel on Growth, Change, Opportunities: Factors Shaping the Banking Sector in CEE, said that one way to stimulate the growth of CEE economies is to further improve access to finance. She explained that the loan-to-GDP ratio in CEE countries remains between 45-50%, while in Western economies it is over 75%, and added that when comparing the CEE banking market with the Western one, the cross-selling index is still much lower. The banking market in the region has yet to reach the maturity phase, Petkova said, noting that there are many opportunities for new services, new products that banks can offer to their CEE clients.

Unicredit Senior CEE Economist Gokce Celik said that the outlook for external demand has deteriorated with the risk of increased tariffs in the US, including on imports from the EU. CEE could be particularly vulnerable given the openness of their economies, although not to the same extent as Germany, Celik added, during a panel on the region's economic indicators hosted by UniCredit. The panel was attended by chief economists from various countries, including UniCredit Bulbank Chief Economist Christopher Pavlov.

Celik explained that the recession in European manufacturing is deepening, especially for the German automotive industry, which is a major trading partner of CEE economies. However, a growth of between 2% and 3% is expected in most CEE countries in 2025, which is above the growth rates in Western Europe.

The forecast of the UniCredit macroeconomists team is that this growth will be mainly due to domestic consumption, which will be supported by still tight labour markets, the release notes. The data shows that employment in CEE is growing, driven by the service sectors, although job creation in industry is decreasing in most countries.

UniCredit Bulbank Chief Economist Christopher Pavlov said that a key priority for the Bulgarian government will be the adoption of the 2025 Budget Act, which will have to reaffirm Bulgaria's commitment to continuing prudent fiscal policy. In particular, Pavlov expects the government to strive to prepare a credible budget plan that envisages a budget deficit consistent with the 3% ceiling established by the Stability and Growth Pact. Pavlov also argued that the new government should try to open up more space for public capital spending so that the country can benefit from the significant amount of EU funds that Bulgaria is entitled to receive under the Recovery and Resilience Plan. Reforms required under the plan should also be a priority, he added.

Pavlov also presented UniCredit Bulbank's baseline scenario, according to which an extraordinary convergence report from the European Central Bank and the EC could be requested by the Bulgarian government within a few weeks or even next week. If the report is positive, the European Council will formally approve Bulgaria's accession to the eurozone probably in May this year, which will make it possible for the country to adopt the euro from 1 January 2026, Pavlov said.