Bulgaria Economic Forecast

Bulgaria Economic Outlook

November 27, 2018

Third-quarter growth fell short of expectations due to another poor outturn for the external sector. Hit by neighboring Turkey’s economic crisis, exports contracted for a second straight quarter; import growth, on the other hand, held broadly steady from a quarter earlier. Meanwhile, domestic demand fared well thanks to brisk household spending in line with falling unemployment and the recent recovery in retail sales. Fixed investment was firm in annual terms thanks to decent absorption of EU-linked structural funding, although sequential data suggested a slight deceleration. Available data for the fourth quarter hints at slightly slower growth. Nevertheless, analysts have largely stuck to their guns and their growth forecasts remain upbeat despite weaker consumer sentiment and near-neutral business sentiment in October. Moreover, further volatility in Turkey continues to threaten exports.

Bulgaria Economic Growth

Slower employment growth and elevated inflation are expected to hit household spending next year, although supportive fiscal policy in the run-up to next year’s European and local elections should cushion any moderation. Fixed investment, meanwhile should continue benefiting from low interest rates and above-average absorption rates for EU funds. A pullback in global trade and, in particular, weaker external demand from the EU and Turkey is likely to curb export growth. Over the medium-term, sound fiscal metrics and an improved business climate should translate into greater FDI inflows. FocusEconomics analysts expect growth of 3.4% in 2019, down 0.1 percentage points from last month’s forecast, and 2.9% in 2020.

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 Yield0.900.0 %Dec 12
Exchange Rate1.72-0.72 %Dec 12
Stock Market593-0.35 %Dec 12

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