IMF: Bulgaria Economy to Bounce Back Thanks to Exports

Bulgaria's economy will start to take off gradually thanks to export demands. Photo by buhovo.ing-pi.com

The increase of export will be the major catalyst of the recovery of the Bulgarian economy in 2010, according to an IMF forecast.

The forecast of the International Monetary Fund is contained in a still unreleased report to be presented to the Bulgarian authorities at the beginning of May 2010 but has been cited by the BGNES agency which claims to have obtained a copy of it.

The Fund says that the stronger recovery of the global economy will boost growth in Bulgaria.

The IMF expects that the Bulgarian GDP will see a 0.2% growth in 2010. This is rather close to the expectations of the Bulgarian government of a 0.3% GDP growth in 2010 – a forecast issued in January 2010 as the Cabinet revised the 2% GDP decline forecast included in the 2010 State Budget Act in the fall of 2009.

Bulgaria’s internal market consumption is said to continue to drop despite the stabilization of the financial markets. This will largely stem from the decline of employment, which is expected to increase from 7.8% on average in 2009 to 9.2% in 2010.

The Fund also forecasts a continued decline of investments in Bulgaria as a result of the harsh credit conditions and the low economic dynamic.

According to the IMF, Bulgaria’s current account deficit will keep going down – from 9.5% of the GDP in 2009 to 6.25% of the GDP in 2010. Bulgaria’s 2010 inflation is predicted to be 2.2%.

The IMF thinks that the expectation of the Borisov government for a 0.7% budget deficit in 2010 is really challenging and optimistic, and forecasts a budget deficit of 1.8% of the country’s GDP.

The Fund’s report warns Bulgaria over considerable risks for its economy posed by the possibility that the parent banks might drain liquidity from their Bulgarian subsidiaries.

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