Financial and business news from Bulgaria

Romania will avoid recession, but what will happen to Bulgaria?

While Bulgaria reported the biggest decline in gross domestic product (GDP) for the second quarter of the year since 1997 and experts expect the crisis in the country to be prolonged, neighbouring Romania may find itself in a better position for the exit from the severe situation caused by pandemic, writes
Our northern neighbour was one of those badly hit by COVID-19 in Europe, but expectations are that it will manage to avoid entering a technical recession in 2020. Austria's Erste Group predicts growth will recover in the third quarter after a sharp mid-year meltdown.

The financial company expects that Romania's GDP will record a growth of 5.9% for the July-September period and a further 2% for the last three months of the year.

Meanwhile, in the second quarter of the year the GDP decline was deeper than that of Bulgaria - 12.3% for April-June for our neighbour compared to the first quarter with a decrease of 10% for our country for the same period

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Data on the performance of economies for the months of July-September will be decisive, with a new decline the Bulgarian economy going into recession.

Erste Group confirms its previous forecast for a 4.7% contraction of the Romanian economy for the whole year. Last month, the country's finance ministry indicated they expected one of 3.8% for 2020.

Regarding how the country will recover next year, experts say it will depend mainly on Bucharest's fiscal policy after the country's elections. Measures to curb the budget deficit and avoid downgrading the country will be key.

However, the Bank predicts that for the period 2022-2024, Romania's GDP will grow by 3.7%, 4.7% and 5.3% respectively and this solid growth will largely be attributed to European funds for the new programming period 2021-2027.

According to the latest forecast of the European Commission (EC), Bulgaria's economy will report a decline of 7.1% of GDP in 2020, and then compensate for part of its loss with growth of 5.3 per cent for the next one.

It is clear from the Commission's summer forecast that the recovery of the Bulgarian economy from the pandemic may be slower than originally expected.

In the spring forecast, for example, it was indicated that GDP could grow by 6 per cent in 2021.

Experts also believe that our country is already in the middle of a crisis, and getting out of it can take an even longer period. According to the chairman of the Bulgarian Industrial Chamber, Radosvet Radev, this may not happen in the next one, but only in 2022.