Brussels Upbeat Economic Forecast Cheers Bulgaria

Amadeu Altafaj, spokesman of the European Union Economic and Monetary Affairs Commissioner Olli Rehn. Photo by ec.europa.eu

The European Commission has expressed optimism about the potential of Bulgaria's economy to rebound as officials figures confirmed that the eurozone economy grew by 1% between April and June.

"Bulgaria does not threaten the stability of the European economy and the European Commission is upbeat about its recovery," Amadeu Altafaj, spokesman of the European Union Economic and Monetary Affairs Commissioner Olli Rehn, told the Bulgarian National Radio on Thursday.

The statement followed the release of official figures, which showed eurozone economy grew by 1% between April and June.

The initial estimate was published last month, showing stronger growth than expected, largely due to strong exports that were boosted by a weaker euro.

The German economy, which grew by 2.2% over the three months, helped to drive the zone's overall growth.

The figures confirmed the eurozone is growing faster than the US economy, which grew by 0.4% during the quarter.

According to Altafaj the figures provide ground for confidence that the European economy will recover, investments will increase and consumption will rise.

"Bulgaria's economy is making up for lost time. The economic indices have not yet marked an increase in comparison with last year, but there is certainly an improvement over the previous quarter," Altafaj commented.

"Bulgaria still has a lot to do to catch up with the other economies, but this will depend to a large extent on external demand. Generally we remain optimistic about Bulgaria," he stressed.

The European Union's poorest country is currently going through its first recession in 12 years after a three-year lending boom stalled and foreign investments dried up.

Earlier this year, the government adopted a package of austerity measures, freezing public pays and pensions in a bid to reduce the bloating deficit.

The consolidated budget deficit exceeded BGN 1.5 B in the first six months of 2010 due to a fall in revenues and a rise in spending for social payments.

The center-right cabinet increased earlier this year its 2010 target for deficit to 4.8% of GDP on a cash basis and 3.9% of GDP under EU accounting rules, far wider than initial estimates.

The cabinet midterm fiscal policy plans envisage that Bulgaria will cut twice its fiscal shortfall to 2.5% of gross domestic product next year.

It revised up to 1% its economic growth forecast for this year, pinning its hopes on increasing exports.

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