Bulgaria Imports (G&S, ann. var. %)

Imports in Bulgaria

GDP growth softens in Q4

GDP growth eased to 2.3% year on year on a seasonally adjusted basis in the fourth quarter, from 3.2% in Q3. Q4’s reading marked the weakest since Q4 2020. The moderation was largely due to slower growth in exports and a drop in gross capital formation.

Domestically, total investment shrank 10.7% in Q4 (Q3: -3.6% yoy) a steep reduction in inventories likely depressed the reading and weighed on overall growth. More positively, private consumption growth accelerated to 5.3% annually from 4.4% in Q3 and supported by stronger wage growth.

On the external front, exports of goods and services growth slowed to 9.0% in Q4 (Q3: +11.1%), dampened by an EU-wide slowdown. Conversely, imports of goods and services in Q4 matched Q3’s 9.3% growth, bolstered by resilient domestic demand.

Sequential growth remained robust: On a seasonally adjusted quarter-on-quarter basis, economic growth was stable at 0.6% from Q3.

Analysts at the EIU commented on the outlook:

“We forecast that private consumption growth will slow, which will represent the biggest drag on growth. Although we expect inflation to moderate substantially this year, consumer confidence will remain low, especially amid stagnating real wage growth. The gross national savings rate will also decline from an estimated 19.3% in 2022 to 16.7% this year. Tight monetary conditions will also squeeze spending. The second-biggest drag on growth will be a widening trade deficit amid a significant slowdown in goods exports.”