EBRD projects Bulgaria's GDP to grow by 1.6% y/y in 2011, 2.3% y/y in 2012.

By bne IntelliNews October 19, 2011
The EBRD has revised further down its growth forecast to real 1.6% this year from 2.3% in its July projection, 3.1% in its May projection and 2.6% in its January projection, according to the latest Regional Economic Prospects report. GDP growth is to accelerate to 2.3% next year (down from 3.7% projected in July and 3.6% projected in May). EBRD explains the deterioration for next year with lower export demand and impacts from the ongoing crisis in Greece. In all countries of EBRD-operation, the GDP will increase by an average of 4.5% this year (down from 4.8% projected in July and 4.6% projected in May but up from 4.2% in its January forecast) and 3.2% next year (down from 4.4% forecast in July). The institution expects the average inflation to accelerate to 3.5% this year (down from 4.2% in its July report and 4.6% projected in May) from 3% in 2010. The fiscal balance is expected to narrow to 2.5% of GDP in 2011 (as compared to 2.6% of GDP in its July report). The CA is expected to turn to surplus of 1.6% of GDP this year as compared to a deficit of 1.5% of GDP in its July projection and 1% of GDP gap last year. The net FDI flows will deteriorate to 1.5% of GDP this year (4% of GDP in its July projection and 4.1% of GDP in 2010). EBRD comments that the main risk for the country is the emerging of spill-over effects in terms of trade, investment and the financial sector because of the tight links with the eurozone countries. The Bank believes that the government will continue its efforts to reduce the fiscal deficit and will maintain the currency board arrangement and will pursue entry into the ERM II mechanism.

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