The European Commission (EC) slightly lowered its forecast for Bulgarian economy growth this and next year. The Commission expects the country’s economic to expand by 3.7% in 2018 and slow down to 3.5% in 2019, compared to 3.8% and 3.6% in the autumn forecast. The estimates for last year’s economic growth have reached 3.8%, which is also 0.1 percentage points less than the autumn forecast.
According to the Commission’s winter forecast, the main driver of economic growth this year and next will be strong local demand, while the contribution of the export sector will only be positive from 2019. The forecasts also indicate that European funds will continue to boost public investment this year and the increase in wages will continue to stimulate private consumption.
The Commission expects both investment and private consumption to be among the main drivers of Bulgarian economy growth next year.
Brussels points out that after having been negative for three years, inflation in Bulgaria has reached 1.2% in 2017, mainly due to higher energy and prices as well as higher commodity prices.
For the current and next year, the EC has also lowered its forecasts slightly, although they remain high. According to the report, the consumer price growth will reach 1.4% in 2018 and 1.5% in 2019. The autumn forecasts were 0.1 percentage points higher.
The accelerating inflation over last year, according to the EC, is due to global oil prices, which are supposed to continue to drive upward energy prices, albeit slower. At the same time, the European Commission’s expectations are that actual inflation will continue to accelerate, as the growth of disposable household incomes will continue to support private demand.