site.btaUBB: Economic Growth Outpaces Projections at end-2024

Bulgaria's economy outgrew projections in the last quarter of 2024, according to an analysis by United Bulgarian Bank (UBB) based on the latest data from the National Statistical Institute.

In the fourth quarter of 2024, the Bulgarian economy grew by 3.1 per cent in real annual terms, according to the NSI's flash estimates.

"Thus, based on the express estimates for the last quarter and the adjusted preliminary data for the remaining three quarters, our estimates show an increase of 2.4% in GDP," said UBB's chief economist Emil Kalchev.

Economic activity in the fourth quarter of 2024 was again driven mainly by final consumption, which increased by 5.8% in real terms with a dominant relative share of 79.9 per cent in the GDP structure.

"Against this backdrop, investment grew very modestly - by 0.7% compared to the fourth quarter of the previous year, and based on its share of 23% in GDP also contributed little to the growth of the economy," Kalchev said. For its part, exports posted an estimated 3.2% decline, while imports increased in real terms by 1.2%.

Bulgaria's prospects for admission to the eurozone have improved significantly, the analysis said.

Not only is there a clear trend towards convergence of the country's inflation rate with that of the euro area, but there is an extremely small gap between the two by December 2024.

UBB expects the data for January 2025, which will be released shortly, to confirm the fulfilment of this criterion. According to the latest convergence reports of the European Commission and the ECB, the price stability criterion was the only formal obstacle to the country's admission to the euro area.

"In the meantime, in the course of the political crisis in the country, budget expenditures have risen, threatening to lead to a budget deficit of more than 3% of GDP. It is in the power of the newly formed coalition in parliament, supporting the government, to limit this spending to the required 3% in order to meet the Maastricht criteria for eurozone accession," Kalchev further noted.