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Bulgaria GDP Q3 2023

Bulgaria: GDP growth records slowest increase since Q4 2020 in Q3

GDP growth waned to 1.8% year on year on a seasonally adjusted basis in the third quarter, from 2.0% in the second. Q3’s reading marked the softest expansion since Q4 2020. On a seasonally adjusted quarter-on-quarter basis, economic growth was unchanged at Q2’s 0.4% in Q3.

The annual moderation was driven by a softer rise in private spending and a sharper decline in exports of goods and services. Household spending growth fell to 5.5% in Q3 (Q2: +8.8% yoy), marking the weakest expansion since Q3 2022. Additionally, exports of goods and services fell 3.1% on an annual basis in the third quarter, which was below the second quarter’s 2.3% contraction. Conversely, imports of goods and services fell at a milder rate of 5.5% in Q3 (Q2: -10.0% yoy). More positively, public consumption sped up to a 3.0% increase in Q3 (Q2: +1.9% yoy). Fixed investment growth also accelerated to 9.6% in July–September from 0.4% in April–June.

Economic growth is seen slowing slightly from current levels in Q4 2023–Q1 2024 before accelerating in the remainder of 2024. This should bring the 2024 full-year expansion above 2023’s projection against a backdrop of resilient private spending, stronger growth in public expenditure and investment, and a rebound in exports. That said, an elevated unemployment rate, softer wage growth and still-tight monetary conditions in the Euro area will cap headline GDP growth. A weaker-than-expected EU economy hindering exports, delayed absorption of EU funds and potential political instability pose downside risks.

Analysts at the EIU commented on the outlook:

“Private consumption will remain the single-largest contributor to growth next year, boosted by strong real wage growth. However, the rate of wage growth will be insufficient to prevent a decline in the gross national savings rate, which will fall from 22% in 2022, to 19.3% in 2024.”

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