The European Commission’s autumn forecast for the EU economy, released on November 11, raised the estimate for Bulgaria’s economic growth this year to 3.1 per cent, but lowered its projection for 2023 to 1.1 per cent.
In its previous summer forecast, the Commission had estimated 2.8 per cent gross domestic product (GDP) growth in 2022 and 2.3 per cent in 2023.
This was the second quarter in a row that the EC raised this year’s growth estimate while cutting the one for next year, having projected 2.1 per cent GDP growth in 2022 and 3.1 per cent in 2023 in its spring forecast.
“Economic expansion is expected to slow down in the second half of 2022 and in 2023, before somewhat higher growth resumes in 2024,” the Commission said, projecting 2.4 per cent growth in 2024.
“Consumer sentiment deteriorated in 2022-Q3, indicating stagnation in household consumption by the end of the year,” the forecast said.
“Household consumption is expected to remain subdued throughout 2023 and then to pick up gradually in 2024, as inflation pressures abate. An important factor that is set to rein in private demand is the assumed higher interest rates in the next two years.”
Bulgaria’s harmonised consumer price index, the figure used to compare inflation with the EU average, was projected to increase by 12.8 per cent in 2022, compared to the 12.5 figure in the summer forecast.
Inflation is expected to slow down to 7.4 per cent in 2023 and 3.2 per cent in 2024, as food price inflation is projected to “decelerate gradually”, while energy price inflation is forecast to “decelerate and turn negative in the second half of next year and then to remain negative in 2024.”