Bulgaria Economic Growth to 3.5%
The European Commission lowered its forecast for the growth of the Bulgarian economy this year from 3.8%, as expected in the spring, to 3.5%. The explanation is the delay in exports. The forecast of the International Monetary Fund in October is that the growth for the year is 3.6%, as is the expectation of the Bulgarian Ministry of Finance, reports Dnevnik.
The EU’s autumn forecast, released today, notes that despite the slowdown, the growth of the Bulgarian economy remains well above the EU average of 2.1%. For 2019, GDP growth is projected to continue with stable 3.7% (such as the estimates of the draft budget prepared by the Ministry of Finance) and the next one – by 3.6%.
Brussels expects inflation to accelerate this year from 2%, as recorded in the spring forecast, to 2.6% as a result of rising energy prices. For the next two years, the forecast is to calm down to 2% and 1.8% respectively.
Sustainable growth against a backdrop of uncertainty in the euro area
The growing global uncertainty, the tensions in international trade and higher oil prices will have a negative effect on growth in Europe, the European Commission predicts. After several years of steady employment growth, the prospect of slowing labor market improvements and increasing supply constraints in some Member States could also reinforce this unfavorable impact.
Eurozone growth is expected to decline from its 2.4-percent peak in 2017 to 2.1% in 2018, before declining further to 1.9% in 2019 and 1.7% in 2020. The same trend is also expected for the EU-27 – projections indicate that growth will be 2.2% in 2018, 2.0% in 2019 and 1.9% in 2020.
“Growth in all EU economies is expected this year and next one, which will lead to more jobs, yet insecurity and risks, both external and internal, are increasing and are having an adverse impact on economic activity. in order to strengthen the sustainability of our economies, at the EU level, this means further strengthening our economic and monetary union, and at national level it is even more important to build up fiscal reserves and reduce debt, while at the same time ensure that the benefits of growth are tangible mostly for the vulnerable members of society, “said Vice-President of the European Commission responsible for the Euro and Social Dialogue Valdis Dombrovskis.
Estimates are drawn up in the context of great uncertainty and there are many interrelated risks of worsening the situation. Realizing any of these risks can increase others and strengthen their impact, the committee’s press release said.
Unemployment continues to decline
Labor market conditions continue to improve in the first half of 2018, with employment growth stagnating even when economic growth began to slow down. Job creation is projected to continue to be supported by economic growth as well as by structural reforms in some countries. Eurozone unemployment is expected to fall to 8.4% this year, then to 7.9% in 2019 and 7.5% in 2020. The EU-wide indicator will reach 7.4% by the end of this year, and 2019 and 2020 will drop to 7% and 6,6% respectively – the lowest levels since the beginning of the century.
Inflation stimulated by oil prices
Inflation in the euro area is expected to reach 1.8% in 2018 and 2019 and fall to 1.6% in 2020. Growth is driven by the rise in oil prices. It is likely that strong positive base effects will continue in the first quarter of next year, the European Commission estimates. Although actual inflation excluding energy and unprocessed food prices has been relatively low this year, it is expected to re-establish itself as the main driver of overall inflation in 2020 due to wage increases amid tightening of markets of labor is recorded in the forecast.
Debt levels are decreasing
Estimates suggest that the general government deficit in the euro area will continue to decline over this year due to lower interest costs. The cut is expected to stop next year for the first time since 2009, with the fiscal position becoming slightly expanding in 2019, before it becomes broadly neutral in 2020, according to a press release from the European Commission.
Brussels forecasts show that the eurozone’s consolidated general government budget deficit will grow from 0.6% of GDP in 2018 to 0.8% in 2019 and then fall to 0.7% of GDP in 2020. The general government deficit of the EU-27 will grow from 0.6% of GDP in 2018 to 0.8% in 2019, then fall to 0.6% of GDP in 2020. Overall, there is a trend of significant improvements over ten years ago when the deficit in 2009 reached a peak of 6.2% in the euro area and 6.6% in the EU.