Bulgaria Economic Forecast

Bulgaria Economic Outlook

July 3, 2018

Comprehensive data put growth in the first quarter at 3.6% year-on-year, a notch above both the preliminary estimate and growth in the fourth quarter last year. Leading the first-quarter expansion was a jump in investment, which benefited from upbeat business sentiment and EU-linked capital spending in the quarter. Externally, the blocwide slowdown did not noticeably restrain exports, which posted solid growth in the quarter. Available data for the second quarter has been mixed; a remarkable decline in the unemployment rate corroborated strong retail sales and improving consumer sentiment, although households likely felt the pinch of higher inflation. On the other hand, industrial gains have been inconsistent in recent months—and output most recently lost ground on an annual basis in April. As it stands, the country’s eventual adoption of the euro was delayed following the ECB’s warnings in June ahead of Bulgaria’s application to the ERM-II. Bowing to the ECB’s preconditions, Bulgarian officials now expect to apply to both the EU’s banking union and the ERM-II sometime in the next year.

Bulgaria Economic Growth

Household spending will benefit from a tight labor market and public-sector wage hikes this year, although inflation is expected to eat into gains somewhat. Heavy EU-funded outlays will prop up investment, which will be further supported by the improving business climate and low interest rates. Sound fiscal policy is expected to attract stronger FDI inflows. FocusEconomics Consensus Forecast panelists expect the economy to grow 3.6% in 2018, unchanged from last month’s forecast, and 3.3% in 2019.

Bulgaria Economy Data

20132014201520162017
Population (million)7.27.27.27.17.1
GDP per capita (EUR)5,7845,9376,3306,7767,141
GDP (EUR bn)41.942.845.348.150.4
Economic Growth (GDP, annual variation in %)0.91.33.63.93.6
Consumption (annual variation in %)-2.52.74.33.54.8
Investment (annual variation in %)0.33.42.7-6.63.8
Industrial Production (annual variation in %)-0.21.82.92.73.4
Retail Sales (annual variation in %)3.810.211.86.13.7
Unemployment Rate11.810.710.08.07.1
Fiscal Balance (% of GDP)-0.4-5.5-1.60.20.9
Public Debt (% of GDP)17.027.026.029.025.4
Money (annual variation in %)9.01.28.87.67.7
Inflation Rate (CPI, annual variation in %, eop)-1.6-0.9-0.40.12.8
Inflation Rate (HICP, annual variation in %)0.4-1.6-1.1-1.31.2
Inflation (PPI, annual variation in %)-1.3-0.9-1.7-2.94.2
Policy Interest Rate (%)0.020.020.010.00.0
Stock Market (annual variation in %)42.36.2-11.727.215.5
Exchange Rate (vs EUR)1.961.961.961.961.96
Exchange Rate (vs EUR, aop)1.961.961.961.961.96
Current Account (% of GDP)1.30.10.02.34.5
Current Account Balance (EUR bn)0.50.00.01.12.3
Trade Balance (EUR billion)-2.9-2.8-2.6-1.0-2.1
Exports (EUR billion)21.221.021.923.125.8
Imports (EUR billion)24.223.824.524.127.8
Exports (annual variation in %)7.8-0.94.25.411.5
Imports (annual variation in %)2.0-1.43.1-1.815.5
International Reserves (EUR)14.416.620.323.923.7
External Debt (% of GDP)88.091.974.071.166.0

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Bulgaria Facts

ValueChangeDate
Bond Yield1.040.0 %Jul 12
Exchange Rate1.68-0.72 %Jul 13
Stock Market627-0.35 %Jul 13

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