site.btaBulgaria's Economy Projected to Enter Stagflation in 2022
With the deterioration of the military conflict in Ukraine, stagflation is a possible scenario for the Bulgarian economy, according to an annual report of the Economic Research Institute with the Bulgarian Academy of Sciences.
The report looks into the state of the global and national economy in 2021and presents economic development projections by 2024.
Stagflation will be driven by the higher prices of the energy resources, which make production more expensive and less competitive with the shrinking of external markets, according to the report. Businesses expect economic growth to decline, and conditions for business to worsen against the background of less revenues and growing costs.
This unfavourable trend applies too to convergence with the eurozone.
Researchers expect that GDP growth will fall to some 2% and by 2024 will gradually recover to pre-pandemic levels.
Inflation will be higher compared with that in recent years and will reach nearly 14% on an annual basis in 2022.
Unemployment is expected to increase slightly and then return to its usual levels of some 5% once stagflation is overcome.
For a second year in a row in 2021 the number of unemployed grew. Because of the delayed transition of the jobless to employment, the number of the long-term unemployed continues to increase and exceeds that in the EU-27.
The average annual wages will continue to increase in nominal and real terms.
The economists forecast that budget revenues by 2024 will remain at about 39 per cent of GDP because of the increasing inflation and the measures in social and income policy, which will boost tax and social insurance revenues. It is very likely that the share of expenditures under the consolidated fiscal programme will reach nearly 50 per cent of GDP in 2022.
At the end of 2022 the budget deficit is expected to reach 5 per cent of GDP and then decrease to 3 per cent of GDP by 2024. With such a development of budget indicators, Bulgaria's entry to the eurozone in 2024 looks very complicated in view of the current Maastricht criteria, the report says.
/PP/
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