Bulgaria: Decline in GDP eases in Q3
A second reading confirmed that GDP declined at a softer rate of 5.2% in the third quarter, following Q2’s 8.6% contraction, amid the gradual easing of coronavirus restrictions.
The third quarter’s improvement largely came on the back of a rebound in total consumption, which grew 2.7%, contrasting Q2’s 0.3% decrease. Moreover, fixed investment fell 6.9% in Q3, marking a softer decline than the previous quarter’s 10.9% contraction.
On the external front, exports of goods and services declined at a sharper pace of 20.8% in Q3 (Q2: -18.4%), likely owing to still-subdued European demand. Conversely, imports of goods and services fell at a softer rate of 4.3% in Q3 (Q2: -19.7%), suggesting an improvement in domestic demand.
On a seasonally-adjusted quarter-on-quarter basis, the economy grew 4.3% in Q3, contrasting the previous period’s 10.1% contraction.
Looking ahead, the economy is set to rebound in 2021 from this year’s coronavirus-induced contraction. Household and capital spending should expand solidly, while a pickup in global demand should support the external sector. Heightened uncertainty and a prolonged health crisis pose key downside risks, however.
Commenting on the outlook for the Bulgarian economy, Ruth Steen, senior economist at Oxford Economics, reflected:
“Despite the second wave of the virus and renewed lockdown measures, we still anticipate solid medium-term growth after the forecast rebound in 2021. As containment measures are relaxed, vaccination schedules are rolled out and confidence improves, we expect some ‘delayed’ consumption to be released, tourism to pick up gradually and output to resume. Additionally, the rebound will be helped by supportive fiscal policy as well as low oil prices, which will help to contain inflation following an upward trend since end-2019.”