EIU: Bulgaria's Economy to Shrink by 0.1% in 2010

Bulgaria's economy will decline by 0.1% in 2010 before it returns to positive growth in 2011, according to the Economist Intelligence Unit.

An EIU report cited by the Romanian agency Mediafax says that Bulgaria's capacity to respond to the economic crisis is limited by the currency peg of the lev to the euro, and the need to maintain a restrictive fiscal policy.

Romania's economy is also forecast to return to growth in 2011, after contracting by 1.2% in 2010 because of harsh austerity measures and resistance to spending cuts that could even lead political instability.

In a July report, the EIU for Romania indicate a 0.6% economic contraction this year and an increase of 0.8% of GDP in 2011, reminds Mediafax.

"In the Balkans, the economy remains vulnerable to crisis. The Balkan countries are exposed to problems of Greece with investment links, trade, banking systems and remittances," the EIU report says.

The consultancy believes that the region of the Balkans, or Southeast Europe, including Bulgaria, Croatia, Romania, and Serbia, will see a 0.2% GDP decline in 2010, and a 3.1% growth in 2011.

The region of Central and Eastern Europe (Czech Republic, Hungary, Poland, Slovakia, and Slovenia) is said to register a 1.6% growth in 2010, after declining by a total of 2.4% last year. In 2011, it will probably grow by about 3%.

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