SOFIA (Bulgaria), April 11 (SeeNews) – Bulgaria’s gross domestic product (GDP) growth is expected to slow down to 2.1% in real terms in 2022, the central bank said, lowering its previous forecast for a 3.6% rise.
The country’s economic output in 2022 will be negatively affected mostly by a projected slowdown in private consumption growth and an increase in the negative contribution of net exports, the Bulgarian National Bank (BNB) said in the latest edition of its quarterly economic review published on Friday.
The Russian war on Ukraine, which started on February 24, leads to a drastic increase in uncertainty about the economic activity and inflation outlook in Bulgaria and makes their forecasting significantly more difficult, the BNB noted.
Bulgaria’s GDP increased by 4.2% year-on-year in 2021, according to the most recent data published by the statistical office.
The central bank also said it expects the country’s economic growth to accelerate to 3.9% next year before slowing down to 3.7% in 2024.
The expected absorption of funds under the National Recovery and Resilience Plan will have the most significant impact on the dynamics of real GDP in 2023 and 2024, the central bank noted. Last week, the European Commission approved Bulgaria’s 13.5 billion levs ($7.5 billion/6.9 billion euro) plan for economic recovery from the coronavirus pandemic.
Bulgaria’s inflation is expected to continue accelerating and reach 9.6% at the end of this year, compared to 6.6% at the end of 2021, the BNB said.
Prices of food will be the strongest inflation driver in 2022, followed by the baseline components and energy products, according to the central bank’s forecast.
Consumer prices in Bulgaria rose by 10% year-on-year in February following an annual increase of 9.1% in January, the statistical office said last month.
The central bank’s current forecast is based on data as of March 29, using assumptions for the development of the international situation and the dynamics of the prices of basic commodity groups on international markets as of March 15. Given the uncertainty about the future development of thye war in Ukraine, the most recent forecast should be considered completely dependent on the implementation of the technical assumptions set in the forecast both for the external demand for Bulgarian goods and services and for the dynamics of the prices of main commodity groups on international markets, the central bank explained.
This forecast is developed on the assumption that the war in Ukraine will remain a local conflict, with no further escalation. In addition, the forecast does not envisage restriction or suspension of natural gas, oil, and nuclear fuel supplies from Russia to Bulgaria, which would significantly affect the production side of the economy, the BNB said.
(1 euro = 1.95583 levs)
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