Bulgaria: Decline in GDP eases in Q4
GDP fell at a more moderate pace of 3.8% in the fourth quarter of 2020, above the 5.2% contraction tallied in the third quarter, amid the gradual firming of activity. On a seasonally-adjusted quarter-on-quarter basis, growth slowed to 2.2% in Q4 from 4.3% in the previous quarter. Taking the year as a whole, the economy contracted 4.2% in 2020 (2019: +3.7%), marking the first decline in activity since 2009.
The fourth quarter’s annual result largely came on the back of an improvement in the external sector. Exports of goods and services declined at a slower pace of 11.2% year-on-year in Q4 (Q3: -20.8% yoy). In addition, imports of goods and services fell 0.8%, moderating from Q3’s 4.3% fall.
On the domestic front, total consumption growth eased to 0.9% in the fourth quarter from 2.7% in Q3. Meanwhile, fixed investment contracted at a sharper rate of 7.4% in Q4 compared to the previous quarter’s 6.4% decrease.
Commenting on the short-term outlook for the economy, Ruth Steen, senior economist at Oxford Economics, noted:
“As restrictions continue to ease, albeit contingent on the containment of the latest wave of the virus, we see activity picking up. Growth will be slow in Q1 but as vaccine rates pick up, allowing further opening of the economy, we see a strong rebound in Q2 and Q3, with our current 2021 forecast showing 3.4% growth.”
Looking further ahead over the medium term, she also noted:
“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.”