Bulgaria's finance ministry raised on October 5 its 2015 GDP growth forecast to 2% from 1.4% projected in the spring, citing better-than-expected outcome in the first half of the year.
The country's economy expanded by 2% y/y in Q1 and 2.2% y/y in Q2, driven mainly by exports, which rose more that anticipated, while household consumption performed below expectations. In the second half, the trend is set to reverse, as exports are affected by weak tourism performance during the key summer season, whereas household consumption is seen improving on the back of an increase in the real disposable income, improved labour market, rising incomes, and lower energy prices.
The growth in investments is to be supported mainly by public investment on the back of accelerated absorption of EU funds from the expiring 2007-2013 programme.
Bulgaria's GDP growth is predicted to accelerate to 2.3% next year, driven chiefly by rising household consumption, while the growth in public consumption and investments is expected to slow and the contribution of net exports is anticipated to fall to 0.3pp from 0.6pp in 2015.
The ministry projects an average annual HICP deflation of 0.7% this year, to reverse to an inflation of 0.8% in 2016. The current account is expected to post a surplus of 1.3% of GDP in 2015, narrowing to 1% next year.
| real GDP growth, % | ||||||
| 2013 | 2014 | 2015f | 2016f | 2017f | 2018f | |
| GDP | 1.1 | 1.7 | 2.0 | 2.3 | 2.5 | 2.7 |
| Consumption | -1.3 | 2.4 | 1.4 | 2.2 | 2.7 | 2.9 |
| Gross fixed capital formation | -0.1 | 2.8 | 1.8 | 1.5 | 2.9 | 3.6 |
| Exports | 9.2 | 2.2 | 7.2 | 4.2 | 4.6 | 5.3 |
| Imports | 4.9 | 3.8 | 6.3 | 3.9 | 5.0 | 5.8 |
| Source: Finance ministry |
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