site.btaBNB Expects 2.1% GDP Growth and 9.6% Inflation This Year

In its macroeconomic forecast for March, the Bulgarian National Bank (BNB) forecasts that Bulgaria's GDP growth in real terms will slow down to 2.1 per cent in 2022. The regular quarterly forecast was published on the BNB website on Friday.

The reduced private consumption growth and the increase in the negative contribution of net exports will contribute to slower economic growth. In 2023 the BNB expects GDP growth to accelerate to 3.9 per cent and then to slow down to 3.7 per cent in 2024. The expected profile of absorption of funds under the National Recovery and Resilience Plan will have the most significant impact on the dynamics of real GDP in 2023 and 2024.

According to the baseline scenario of the BNB forecast, annual inflation is expected to continue to accelerate in 2022 and amount to 9.6 per cent at the end of the year (compared to 6.6 per cent according to the forecast from the end of 2021). The BNB expects the food and energy group to have the highest positive contribution to inflation at the end of 2022.

The BNB forecast for key macroeconomic indicators was prepared as of March 29, using assumptions for the development of the international situation and the dynamics of prices of major commodity groups on international markets as of March 15.

The war in Ukraine, which began on February 24, has dramatically increased uncertainty about the prospects for economic activity and inflation in Bulgaria and makes it much more difficult to predict them, the BNB said. The main assumption in the preparation of the forecast is that the war will remain a local conflict, in which there will be no further escalation or expansion of hostilities, including to other countries. In addition, the forecast does not envisage restricting or stopping the supply of natural gas, crude oil and nuclear fuel from Russia to Bulgaria, which would significantly affect the production side of the economy.

Market expectations are that electricity and natural gas prices in euro will continue to rise significantly on an annual basis until the end of the first quarter of 2023, and in the case of oil prices, until the end of 2022.

The technical assumptions set in the forecast for the dynamics of external demand for Bulgarian goods and services take into account the baseline scenario of the European Central Bank's macroeconomic forecast of March 2022, but are significantly more conservative, as they assume that demand for Bulgarian goods and services from Russia, Ukraine and Belarus could disappear, and decrease in euro area countries. As a result, technical assumptions suggest a 0.4 per cent decline in external demand for Bulgarian goods and services in 2022. 

/RY/

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By 04:03 on 10.01.2025 Today`s news

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