site.btaUPDATED Risks for Bulgarian Economy Are Multiplying - German Trade Agency

The Bulgarian economy is facing new risks, mostly due to the rising energy and transport prices, according to Germany's Trade and Invest (GTAI) agency, quoted by the German-Bulgarian Chamber of Industry and Commerce in their latest newsletter Bulgarien Aktuell sent to BTA on Wednesday. The economic growth is slowed down by inflation and problems in the supply chains.

Rising global costs, particularly of energy, food, and raw materials means less demand here. This results in pressure being exerted on imports.

Risks hamper economic growth

Rising energy costs exert pressure on Bulgarian households. The share of energy costs from households in Bulgaria is 20%, which is lower than the EU average of 25%. The purchasing power of the Bulgarian household however is nearly half its EU household equivalent.

The EU forecast is for real GDP growth of 2.1% in 2022 and 3.1% in 2023. UniCredit Bulbank's forecast on the other hand is for 1.4% in 2022 and 3.5% the following year.

Decreased demand for goods across Europe and the lack of tourists from Russia and Ukraine will negatively impact the rate of exports.

Demand: Inflation suppresses demand

Private consumption will grow more slowly. One of the reasons for that is that the real income of a large share of the population will drop sharply in 2022. Salary increases in both the public and the private sector will remain lower than the inflation rate. The nominal monthly gross income will increase on average by 7% in 2022, while the inflation rate is forecast at 14% by the Vienna Institute for International Economic Studies quoted in the GTAI publication.