Financial and business news from Bulgaria

The Commission announced how much the Bulgarian economy will shrink this year

Bulgaria's economy will shrink by 7.2 per cent this year before recovering by 6 per cent next year according to the European Commission's economic forecasts announced today.
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EU shrinkage is expected of the economy by 7.5 per cent this year and growth of 6.1 per cent in 2021, and for the euro area a decline from 7.75 per cent in 2020, followed by a growth of 6.25 per cent next year, BTA informed.

The strength of the Bulgarian economy and the positive external and fiscal balance before K-19 should help the country recover from the major economic disruption caused by the pandemic, the EC said in its spring economic forecasts for EU countries published today.

In February, before the impact of the coronavirus pandemic, the Commission was betting on growth of the Bulgarian economy of 2.9 percent in 2020. For 2019 our country reported an increase in gross domestic product of 3.4 per cent.

Restoration of economic activity is expected in the second half of 2020 with the gradual abolition of restrictive measures. Domestic demand is expected to strengthen as early as the third quarter and continue to grow in the fourth quarter, the document states.

The European Commission notes that unemployment is on the rise, although government support softens the impact on the labour market. For this year, unemployment is expected to reach 7 per cent, and in 2021 to fall to 5.8 per cent.

The unemployment rate has increased significantly since the introduction of measures against the spread of coronavirus, the Commission said, adding that the trend is partly supported by workers returning from abroad.

According to the Commission, the most jobs will be lost in the services sector, where the disruption is expected to last the longest.

In 2019 the unemployment rate was at 4.2 per cent. Nominal wage growth after years of substantial growth is expected to weaken to 3.5 per cent in 2020 and 2.25 per cent in 2021.

EC predicts that consumer inflation will fall from 2.5 per cent in 2019 to 1.1 per cent in 2020 and will remain at this level next year.

To a large extent the explanation for the trend is the collapse of oil prices, the European Commission points out. Bulgaria welcomes the Covid-19 pandemic with a strong fiscal stance, the institution commented, recalling that the budget surplus last year reached 2.1 per cent.