site.btaFinance Ministry Expects GDP Growth to Slow Down to 2.6% This Year

Bulgaria's economic growth will slow down to 2.6% in 2022 from 4.2% in 2021, according to the Finance Ministry's spring economic forecast which was published on Tuesday.

This implies a revision of the ministry's autumn forecast, according to which the national economy would grow by 4.9% in 2022 and average annual inflation would stand at 2.2%. The new forecast puts gross domestic product (GDP) in 2022 at 143 billion leva.

The Finance Ministry commented: "The Russian invasion of Ukraine changed Bulgaria's economic outlook for 2022 and over the medium term. The war conflict has pushed up energy prices and the prices of essential raw materials. At the same time, the flow of refugees into Bulgaria is believed to have a positive impact on economic activity."

State budget revenues will be affected by high inflation. Annual average inflation in 2022 is forecast at 10.4%.

The main inflation driver will be food. The increase of food prices will accelerate to 16.4% on an annual basis as of December.

Transport fuel prices are expected to grow by 25.1% in 2022.

Also in 2022, market demand for loans will decrease amid a deteriorating economic situation and growing insecurity. The growth of corporate borrowing will go down to 4.6%, and that of household borrowing to 9.9%. Despite the expected slower growth of home purchase loans, the growth rate in this segment will remain relatively high, the Finance Ministry said.