Bulgaria’s c-bank expects economic growth to slow down in H1

SOFIA (Bulgaria), March 9 (SeeNews) – Bulgaria’s real gross domestic product (GDP) growth is expected to slow down in the first half of 2022 compared to the second half of 2021, the country’s central bank said without quoting figures.

On Tuesday, the National Statistical Institute (NSI) said that Bulgaria’s GDP increased by 4.2% in 2021. In the fourth quarter of 2021 alone, the economic output grew by 4.7% on an annual comparison basis, following a 4.6% increase in the third quarter.

The contribution of private consumption is likely to decline in the first half of this year while that of fixed capital investment will rise amid strengthened investment activity of the government, the Bulgarian National Bank (BNB) said in the latest edition of its quarterly economic review published on Tuesday.

Inflation is anticipated to continue rising over the first half of 2022, the central bank also said.

“There are risks of a stronger increase in prices vis-à-vis the baseline scenario, reflecting mainly possible changes in regulated prices of electricity, water and sewerage services and heating after the expiry on March 31, 2022 of the moratorium on these prices introduced by the government in December 2021,” the BNB also said.

Bulgaria’s consumer prices rose by 9.1% year-on-year in January following an annual increase of 7.8% in December, according to the latest preliminary data by the NSI.

In the first half of 2022 external demand for Bulgarian goods and services is projected to grow on an annual basis, with its rate expected to moderate gradually compared to that in the last quarter of 2021, the BNB said in its economic review.

“Over the first half of 2022, the total current and capital account surplus is expected to expand as a share of GDP from the end of 2021, mainly due to the projected increase of the positive balance on net secondary income and the persistent upward trend in the net services surplus,” the central bank also said.

In the first half of this year, the trend toward a gradual slowdown in the growth of deposits on an annual basis is expected to be sustained. The projected slowdown in the growth rate of private consumption in real terms will limit the credit growth, the BNB noted.

“At the same time, still low lending rates along with projected high consumer price inflation and sustained expectations of a continuous increase in house prices will support demand for loans by households,” the central bank added.