Bulgaria GDP Q4 2016


Bulgaria: Growth steady in Q4

March 7, 2017

The economy recorded another healthy expansion in the fourth quarter, bringing full-year growth to 3.4%. Although growth in 2016 marked a slight deceleration from 2015, Bulgaria remains one of the fastest growing economies in the region.

Official data released on 7 March showed that the Bulgarian economy expanded 3.4% in Q4 compared to the same period of the previous year, matching Q3’s result. Q4’s print was mainly driven by an acceleration in private consumption growth (Q4: +1.7% year-on-year; Q3: +1.3% yoy) and a rebound in government consumption (Q4: +0.5% yoy; Q3: -1.6% yoy). Meanwhile, fixed investment contracted for a third consecutive quarter, albeit at a slower pace (Q4: -1.5% yoy; Q3: -1.8% yoy).

On the external side of the economy, export growth moderated from a 9.5% expansion in Q3 to a 6.8% increase in Q4. Meanwhile, imports registered a 5.5% expansion (Q3: +7.5% yoy). As a result, the external sector’s net contribution to economic growth decreased from 1.1 percentage points in Q3 to 0.7 percentage points in Q4.

Domestic demand is set to remain robust in the first half of 2017 thanks to the ongoing improvement in consumer confidence and falling unemployment rate. Likewise, fixed investment is expected to rebound this year thanks to the resumption of EU funding for infrastructure projects. Despite this seemingly positive outlook, the economy will likely decelerate this year as imports strengthen on the back of strong domestic demand.

The Ministry of Finance expects the economy to expand 2.9% in 2017. FocusEconomics Consensus Forecast participants expect GDP to expand 3.0% in 2017, which is unchanged from last month’s Consensus. In 2018, panelists also see the economy growing 2.9%.

Author:, Economist

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